LIBRARY OF CONGRESS. 

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i|Hp.Y^^_ itip^HBli f XT 

Slielf.23.1_ 



UNITED STATES OF AMERICAi . 



LV(^ 



THE 



Premises of Political Economy; 



RE-EXAMINATION OF CERTAIN FUNDAMENTAL PRINCIPLES 



EOOKOMIC SCIEI^OE. 



/ BY 

SIMON K PATTEN, Ph.D. (Halle). 



W OF CO^ 



<,J^^S\ 



PHIIiADETjPHIA; 

J. B. LIPPINCOTT COMPANY. 
1885. 






Copyright, 1886, by Simon N. Patten. 



eduaiian. 



TEACHER AND FRIEND, 

DE. JOHANNES CONEAD, 

PKOFESSOR IN THE UNIVERSITY OF UALLE, 

TO WHOSE KIND ENCOURAGEMENT AND INSPIRING EXAJIPLE HIS MANY 
STUDENTS OWE SO MUCH, 

THIS LITTLE AVORK 

IS GRATEFULLY DEDICATED BY 

THE AUTHOR. 



COE^TEJ^TS. 



PAOE 

Introdttction 7 

OHAFTEK 

I.— Kent 19 

II. — The Social Causes producing a High Price 

OP Food 46 

III. — The Law of Population 72 

IV. — The Kelation of Kent to Wages ... 95 

V. — Free Competition 121 

VI. — The Law of Diminishing Keturns . . ' 152 

VII.— Free-Trade 184 

VIII. — The Means of maintaining a High Stand- 
ard OF Life 211 



IlvrTKODUOTIOK 



The Science of Economics has had a historical de- 
velopment. At first some of its important truths were 
dimly perceived, then a theory was formulated, new 
doctrines from time to time were added, the old doc- 
trines gradually became better known and understood, 
and errors have been gradually detected and discarded. 
As a result of this development the doctrines of the 
science have been formulated in a very objectionable 
manner, and economic truths have lacked symmetry, 
the newer doctrines not having been applied to all parts 
of the science, while old errors, though driven from 
their strongholds, still lurk in many unsuspected 
corners. These considerations make a return to the 
discussion of first principles necessary, and this I take 
up the more readily because of a conviction that they 
are not correctly apprehended in the current economic 
literature. 

Since the time of Ricardo the discussion of first 
principles has been very one-sided, the ultimate prem- 
ises used by him having been accepted by most subse- 



8 INTRODUCTION. 

quent writers. It is true that many economists have 
rejected the premises of Ricardo, but having done this 
on other than purely economic grounds, they have had 
little or no effect on the development of the science. 
It is my purpose in the following discussion to contest 
from strictly economic grounds the validity of several 
fundamental propositions laid down by Ricardo and 
other writers of the same school. 

A word of explanation is necessary to prevent an 
erroneous conception of my purpose. I do not call in 
question those ultimate facts concerning the physical 
conditions of external nature of which Ricardo makes 
so much use, and on which deductive Economics is at 
present based, but shall endeavor, by the use of other 
facts equally ultimate in their nature, to prove that 
many of the leading doctrines now accepted by most 
economists must be discarded, to give place to other 
doctrines more in harmony with the real phenomena. 

An illustration from natural science will make clear 
what I have in view. The motion of the earth around 
the sun is the result of two separate forces, either of 
which operating alone would produce a far different 
result. If gravitation were the only operating force, 
the earth would fall into the sun, but if the first law 
of motion alone prevailed, the earth would fly away 
into empty space. If only one of these forces, as 
gravitation, were known, men would predict the de- 



INTRODUCTION. 9 

struction of the earth by fire as a fact of the near 
future, and those who denied this, as inconsistent with 
the kindly purposes of Providence or what not, would 
be regarded as unscientific, and derided for bringing in 
other than physical causes to account for the phenomena 
of nature. 

The justice of these charges would entirely depend 
upon the method pursued by the objectors. If they 
denied the law of gravitation, the charge would be 
just; but if they sought to demonstrate the existence 
of natural laws that counteracted gravitation, and thus 
to prove false the conclusions based on the assumption 
that gravitation were the only operating force, then they 
would be pursuing a proper coui^se of investigation, 
and could not justly be stigmatized as unscientific. 

The present Science of Economics is as imperfect as 
Astronomy would be if one of the laws of motion 
were unknown. In each department of Economics all 
the deductions are based on some one ultimate fact, and 
the conclusions arrived at are true only on condition 
that no other ultimate facts exist which influence the 
phenomena under investigation. The law of rent is 
usually discussed as though differences of soil were the 
sole cause of rent, and the law of population only con- 
siders the difference between the possible rates of in- 
crease of population and food, while free trade and the 
effects of free competition are discussed from an equally 



10 INTRODUCTION. 

narrow stand-point. It is plain that such discussions 
are of a very limited value, if many ultimate facts, or 
even any, are overlooked, and it is my purpose to point 
out these neglected facts, and to place them in proper 
relation to those facts at present so much used in de- 
ductive Economics. 

The increase in the price of food accompanying the 
advance of civilization, is the main point which eco- 
nomic theories have to explain. Is the increased price 
the result of a single cause, or does it arise from a 
combination of various causes, and are these causes 
of a physical or of a social nature ? The well-known 
answer of Ricardo is that there is a single physical 
cause, — the various degrees of fertility which diflferent 
lands possess. The best lands are limited in quantity, 
and as the demand for food increases less fertile lands, 
having a higher cost of cultivation, must be brought 
into use, and hence the price of food must rise when 
more food is required for an increasing population. 
Kicardo gives this answer in his explanation of rent, 
and Malthus adopts the same view in discussing the 
law of population, by assuming that the means of sub- 
sistence are exhausted, or nearly so, because the pi^ce 
of food is high. It is no wonder that so simple and 
apparently self-evident an explanation has found ready 
acceptance, and one theory of rent having been pre- 
sented, no one took the trouble to investigate whether 



INTRODUCTION. H 

some other theory could account for all the facts needing 
explanation. 

In the following chapters I shall endeavor to present 
a consistent theory, showing that the main causes of 
rent, and of the increased price of agricultural produce, 
are not of a physical, but of a social nature. The 
prevalence of ignorance, and a lack of appreciation of 
inexclusive pleasures, cause a demand for commodities 
of which nature can supply but small quantities, waste 
a large part of what is produced, and at the same time 
prevent the distribution of population and the increase 
of capital. The ignorant and inefficient classes dis- 
place the skilled and intelligent, because their wants 
are so limited that they are able to give a greater sur- 
plus as rent than the higher classes can do, and what- 
ever class can give the greater surplus gets posses- 
sion of the field of employment, and thus the survival 
of other classes is prevented* By these social causes a 
high price of food can be brought about, but this high 
price affords no indication of the exhaustion of the 
food-supply, unless the field of employment is much 
larger to the ignorant than to the intelligent classes. 
From the nature of the field of employment, then, 
must it be determined whether rent has physical or 
social causes. If the field of employment enlarges as 
the people become skilled and accumulate wealth, then 
what may be called the social theory of rent is correct ; 



12 INTRODUCTION. 

on the other hand, if the ignorant possess much the 
larger field of employment, then the physical theory 
of rent based on the natural obstacles to the increase 
of food must be accepted. The only condition on 
which it could be true that the field of employment 
would be larger to the ignorant than to the intelligent 
classes, is that the greater portion of the land of the 
earth has so low a degree of fertility that the higher 
classes cannot be employed on it. If the greater part 
of the land has, or can be made to have, a high degree 
of fertility, there can be no doubt that the intelli- 
gent classes, when not prevented by social causes, can 
obtain a much larger gross produce from the more fer- 
tile land, and, while supporting a much larger popula- 
tion, can also increase the average return for labor 
above what the inefficient classes could get from all the 
land. Whether the physical or social theory of rent is 
correct must be determined by the ratio of the superior 
to the inferior lands, and if I show that most of the 
land either has, or is capable of having a high degree 
• of fertility, I shall disprove the physical theory of 
rent, which explains the increased price of agricultural 
produce from physical causes. 

The difference between the view of nature which 
Ricardo tacitly adopts and that which I advocate may 
be well illustrated in the following manner. Suppose 
the bed of a lake, like that of Lake Michigan, to be 



INTROD UCTION. 1 3 

gradually filled with water, how could its depth at 
any given point be determined? Kicardo, if he 
reasoned as he does in solving the problem of rent, 
would answer that the depth at any point could be dis- 
covered by determining how much the water had risen 
since the point in question was submerged. 

Now this method of procedure overlooks the effect 
of the water on the lake's bed. The depth at various 
places has been changed by the currents in the water 
and by the action of the waves. The outline of the 
bed of Lake Michigan is very different from what it 
was when first filled with water, and no knowledge of 
its old outline will enable us to determine deductively 
the outline of the present bed. 

Most of the conclusions drawn from the law of rent 
are defective, because it is assumed, first, that land is 
thrown out of cultivation, when less land is needed, in 
an order exactly the reverse of that in which it is 
brought into cultivation, — the last land brought into 
that cdltivation being the first to be thrown out ; and, 
secondly, the rise of rent since land of a given quality has 
been brought into cultivation is a correct index of the 
rent that could be paid for the land. The extent and 
character of the field of employment sets a limit to the 
support of population, and fixes the average return for 
labor ; and if this field of employment, besides being 
determined by external nature, is also influenced by 



14 INTRODUCTION. 

the skill and intelligence of the laborers, just as the 
bed of a lake is changed by the action of the water 
within it, then the influence of the different civiliza- 
tions upon the field of employment must be determined 
before it can be known how an increase of population 
will affect the average return for labor. I shall es- 
pecially strive to show that, as the law of rent has not 
been correctly apprehended, the field of employment 
enlarges when the intelligence and efficiency of labor 
is increased, and that the highest average return for 
labor is compatible with the greatest possible popula- 
tion ; while, on the other hand, whatever diminishes the 
average return for labor also limits the field of em- 
ployment so that only a smaller population than before 
can be supported. 

The real cause of the present social distress is to be 
found in the prevailing sentiment regarding the con- 
sumption of wealth, and especially of food. Nature 
is not equally productive of all kinds of wealth, and 
men cannot expect to choose those forms of wedfith of 
which nature is least productive and receive the same 
reward as if they chose for consumption those articles 
supplied most abundantly by nature. Men complain 
of the niggardliness of nature, when really the only 
thing wrong is the universal disposition on the part of 
men to prefer those forms of wealth of which nature 
is least productive, instead of other commodities of 



INTRODUCTION. 15 

which nature offers a generous supply. As soon as the 
productive power of men is increased, it is not used to 
augment their supply of commodities, but to enable 
them to obtain articles produced by nature less abun- 
dantly than those formerly consumed. Meat is de- 
manded instead of vegetable food, wheat-bread instead 
of rye-bread, while corn is mainly used as animal food 
or for making whiskey, and tobacco displaces other 
crops of which the earth is more productive. The 
same change in the demand for commodities causes silk 
to be preferred to the more abundant cotton, seal-skin 
cloaks to be chosen instead of the equally useful ones 
made from wool ; and on all sides could other examples 
of a like nature be pointed out. 

I am well aware that these changes are often looked 
upon as the best evidence of an advancing civiliza- 
tion, and that this is especially true in England and in 
America. The Anglo-Saxon race pride themselves on 
the fact that they reject the greater part of those arti- 
cles of food which the land cultivated by them can 
produce. They love a diet composed almost wholly 
of beef and white bread, and look down with con- 
tempt upon the German with his sausage and black 
bread, the Frenchman with his soup and frogs, and all 
other nations that have a diet more in harmony with 
the natural conditions by which they are surrounded. 

It is not my purpose to endeavor to determine which 



16 INTRODUCTION. 

of these races has the most resources for happiness. 
However instructive such a study may be, as an econ- 
omist I am more interested in studying what are the 
effects of these different modes of the consumption of 
wealth on its production and distribution. We can 
choose any form of consumption, but we cannot avoid 
the necessary effects which accompany our choice. 
Every soil is more productive of some one crop than 
of another, and the same soil will produce more when 
used for a variety of crops than when one only is 
raised. The land of any country can produce a certain 
quantity of each kind of food more advantageously 
than if a greater or less quantity were demanded for 
consumption. When all the land is put to its most 
productive use, there is a fixed relation between the 
quantities of the various articles produced, and if more 
or less of any article is produced than its proportional 
share, the gross produce of the whole country will be 
diminished. 

We have, then, two distinct types of civilizations, — 
the one in which those things are desired of which 
nature is least productive, the other in which each in- 
dividual conforms to those external conditions neces- 
sary for the greatest possible production, I desire to 

\ point out that the economic. laws of these two different 
civilizations are not the same, and that the doctrines 

I whose universality is asserted by the English school 



INTR OD UCTION. J 7 

of economists are only true of a civilization where the 
mass of the people prefer those commodities which can 
be produced by nature only in relatively small quanti- 
ties. It is only when the land is used to produce a 
very few articles of food that the Ricardian theory of 
rent is true, and it is only in those nations desiring but 
a small variety of food and having but few sources of 
pleasure where the tendency to increase of population 
is so great as to be injurious. Under these conditions 
tlie gross and average return for labor is so small that 
a low class of laborers become a necessity, and they 
can be utilized only by a large scale of production 
making the laborers dependent upon their employers 
and preventing free competition through the combina- 
tion of the few capitalists who control each industry. 
As soon as a nation decides the use for which its land 
shall be employed, it determines for the most part the 
character of its inhabitants, the scale of ite industries, 
the manner in which its wealth shall be distributed, 
and the degree in which competition shall be really 
free. 

Just laws for the distribution of wealth cannot com- 
pensate for the reduction in the average return for 
labor necessitated by a choice of those articles of food 
supplied by nature in but very limited quantities. So 
long as the present mode of consumption continues, 

neither the nationalization of land nor even the appro- 
6 2* 



18 INTRODUCTION. 

priation of all the means of production can increase 
the average income to such a degree as to make its 
possessor comfortable and happy. The losses to the 
laboring classes occasioned by an unequal distribution 
of wealth are very small when compared with what is 
lost through a disregard, on their part, of the conditions 
by which the food-supply is increased. When they com- 
ply with these conditions not only will they obtain all 
the increase of produce, but they will also set in motion 
causes which will bring to them the greater part of what 
is now enjoyed by the other classes. The economic 
conditions making desirable the nationalization of land 
and other more socialistic measures are those which 
also raise rent and bring about such a struggle for 
food as to reduce wages to a minimum. Nowhere can 
stronger adherents of the Ricardian doctrines be found 
than among the socialists, and this is because their 
conception of natural laws accords with the views of 
Ricardo. If the doctrines of Ricardo are not univer- 
sally true, a civilization is possible in which each indi- 
vidual, by complying with the surrounding external 
conditions, can obtain all that reward which nature 
offers for labor and abstinence, and when men comply 
with these conditions they will no longer need the 
above-mentioned measures to insure a just distribution 
of wealth. 

If the social theory of rent is correct, it is necessary 



INTR OD UCTION. 1 9 

to explain why there is at the present time such an un- 
equal distribution of wealth, and why wages are low 
when they might be high. I shall show that when 
two different classes of laborers representing two dif- 
ferent civilizations contest in the same society for the 
occupation of the field of employment, the power to 
survive depends, not on a higher average return for 
labor, but on the surplus which can be given as rent, 
the class commanding the larger surplus getting posses- 
sion of the field of employment. That class of laborers 
which can pay the highest price for food can deprive 
others of the necessary means of support, and hence ob- 
tain the victory in the contest. For a higher class of 
laborers to displace a lower, they must, in a state of free 
competition, be able to pay more for food and still have 
sufficient incomes remaining to maintain that stand- 
ard of life to which they are accustomed. When this 
cannot be done, the intelligence and skill of the laborers 
are reduced, progress and the increase of population are 
checked, and society becomes stationary. 

The ultimate cause of the present low return for labor 
is not to be found in the niggardliness of nature, but 
rather in the combination of cheap labor and low inter- 
est, by which the price of food is forced so high, and 
the value of other commodities so low, that the more 
intelligent classes are driven from the field of employ- 
ment, or their numbers so reduced that they only do 



20 INTRODUCTION. 

work with which cheap labor cannot compete. So long 
as nine-tenths of the labor of any society can be per- 
formed by a very low class of laborers, as is the case in 
our present industrial state, the mass of the people will 
remain ignorant and degraded, unless society by its laws 
and customs prevents the success of that combination 
which is the chief cause of our present evils. A higher 
social state cannot be attained while free competition 
results merely in a displacement of the higher classes 
by their inferiors, who, having no desire for, or appre- 
ciation of, better things, can force the price of food so 
high that no one else can compete with them. 

In the first chapters of this work the problems re- 
lating to land, population, and the effect of increased 
production on the average return for labor are dis- 
cussed ; and then free competition, the causes of an 
unequal distribution of wealth, and the hinderances to 
social progress are considered, and some of the means 
of bettering our present social state are pointed out. 



THE PREMISES 

OF 

POLITICAL ECONOMY. 



CHAPTER I. 

BENT. 



The theory of rent as commonly taught makes 
differences of soil the cause of rent. As some soils 
are more fertile than others, the produce is raised at 
different costs of production, so that if the price of the 
produce is high enough to give the usual profit on that 
portion of the whole crop which is raised at greatest 
expense, it will give more than the ordinary profit to 
those portions raised at less expense. There will there- 
fore be a surplus value in the proceeds from some lands 
beyond what will cover the expenses and profits of the 
crops, and the amount of this surplus is said by Eicardo 
to be the amount of the rent. 

There can be no doubt that soils of different degrees 

21 



22 THE PREMISES OF POLITICAL ECONOMY. 

of fertility are in cultivation, but whether this fact is 
the sole, or even a necessary, condition of rent may well 
be questioned. 

That the poorest land in cultivation should pay no 
rent requires that there should be no other purpose 
than cultivation to which the land can be put. This 
is rarely or never true, as man does not subsist alone 
on cultivated plants, such as wheat, oats, and corn, 
but also on plants that require no cultivation, and on 
animals that can live on uncultivated land ; he also has 
use for lumber and fuel, and the trees from which they 
are obtained grow on untilled land. When land is 
needed for cultivation it cannot be had for nothing, 
since it is valuable to its owners for other purposes. 
Upon uncultivated land, for instance, cattle and sheep 
can be kept. Persons who wish to cultivate land must 
compete with those who wish the land for grazing pur- 
poses, and as all lands that can be cultivated can be 
used for pasture, and will yield the usual profit and 
leave something for rent, those who wish to till the 
land must be able to bid over the herders in their offers 
of rent. The same is true in regard to timber land. 
Trees will grow in sufficient quantities on all land 
which can be cultivated more than to repay for the 
labor and capital needed to prepare them for market, 
and all tillable timber lands will yield a rent to their 
owners. Hence persons who desire to obtain this land 



RENT. 23 

for tilling must pay more rent than the owners can 
obtain from those who cut wood. 

The rent of uncultivated land does not, as does that 
of cultivated land, depend upon the differences of fer- 
tility. Cultivated land, whether good or poor, must 
be ploughed and worked just the same, the poor, if 
there is a difference, needing more labor than the good. 
Hence the cost of cultivation is by the acre, while the 
profit is according to fertility. If two persons raise 
equal amounts of produce, one from one hundred 
acres, the other from two hundred acres of laud, he 
who works the two hundred acres should pay a much 
lower rent than the other, since he must retain a double 
amount to repay him for his extra cost of cultivation. 
But in grazing the case is different. If two hundred 
acres of a certain land will keep as many sheep or 
cattle as one hundred acres of better land, the two 
hundred acres of poor land will rent for as much as 
the one hundred acres of good land. The renter of 
the two hundred acres, having no additional expenses, 
is at no disadvantage in competing with the renter of 
the one hundred acres, and must pay as much rent. 
The same is true of timber land. It costs no more to 
cut a quantity of wood from poor than from good 
land. The rent of timber lands will therefore be pro- 
portional to the timber on the lands, and rent can be 
paid for the poor as well as for the good. 



24 THE PREMISES OF POLITICAL ECONOMY. 

There are still other purposes for which land can be 
used profitably. On very sterile lauds, for instance, 
wild game will thrive, which will more than repay the 
cost of killing and bringing to market ; and as such 
game is often killed merely for sport, poor lands are 
in some countries, especially in England, set apart solely 
for hunting preserves. The rich men who own these 
preserves may pay more for sport than their game 
would fetch in market, but that such lands would yield 
a rent if the owners wish it is shown by the fact that 
men violate law and kill game in these preserves, even at 
great risk. There would certainly be no poachers if the 
value of the game did not exceed the cost of killing it. 

It is often asserted that there is land so distant from 
market that it can yield no rent. In new countries 
this may sometimes be the case, but distance from 
market will not of itself remain a permanent reason 
why any land cannot pay rent. A land-owner has a 
choice of local and distant markets, and no produce 
will be sent to a distant market unless the price there 
is enough higher than the price at home to pay cost of 
transportation. This additional price can usually be 
paid, since production on a large scale at distant places 
is much more productive than local industries on a 
small scale. Producers on a small scale can, however, 
offer a price for food high enough to yield the landlord 
a considerable rent, and more than this rent must be 



RENT. 25 

offered by distant producers before they can displace 
local industries. 

In view of these facts, it is clear that all cultivated 
lands, except in very new countries, must pay rent. 
Even the poorest land cultivated must pay rent, for 
those wishing it must compete with those who want it 
for purposes not requiring cultivation. 

The Ricardiau theory of rent supposes that the 
greatest return is to be obtained when all the land of 
a country is cultivated. This, however, is not true, 
since from all the land of a country less produce will 
be obtained than if only a part is cultivated. To have 
a proper rainfall, it is necessary that a large part of the 
land of a country should be covered with trees, and 
if these are cut away to bring all the land into culti- 
vation, while the owners of the forest lands may profit 
by it, the owners of the other lands will lose more 
than the first gain, and on the whole the country will 
lose, since, the gross production being diminished, a 
less population than before can be supported. When the 
greater part of a country is cultivated, the way to support 
a larger population is not through increasing the area 
under cultivation, for this will lessen the gross return, 
but through improving that already under cultivation. 

The effect on the gross return of the country of till- 
ing poor lands instead of using them for forestry, is 
clearly shown by the floods on the Ohio and Missis- 



26 THE PREMISES OF POLITICAL ECONOMY. 

sippi Rivers. At the sources of these rivers the 
forests are being cleared away so that the ground may 
be cultivated. The waters of these rivers are precipi- 
tated so rapidly into the valleys below that they are over- 
flowed, and much of the best land in the country ren- 
dered useless for cultivation. If the poorer lands on the 
mountain-sides are cleared and cultivated the valley 
lands cannot be, since they will be subject to overflow. 
As a result there will be a movement of population 
from the fertile valleys to the sterile hill and mountain- 
sides, and a reduction of the gross production of the 
country. A country can till either the fertile valleys 
or the sterile mountain-sides, but not both. 

Clearly, then, the fact that there are untilled lands 
in a country does not prove that there are lands in 
cultivation which yield no rent, for the produce of a 
country will be greater when certain lands are not cul- 
tivated but are covered with forests. It is said that 
one- fourth of the land of a country should be in forests. 
Although this proportion may be too large, yet the 
question of importance is not what is the relative fer- 
tility of the worst and best lands in a country, but 
what is the fertility of the better lands that remain 
after a proper portion is reserved for forests, since 
the poorest lands can be used for producing trees, and 
the best reserved for cultivation. 

The most important objection to the Ricardian theory 



RENT. 27 

of rent is that lands do not remain in the same ratio 
of fertility as that in which they are regarded when 
they are first brought into cultivation. Ricardo talks 
of the inexhaustible qualities of the soil, and later 
writers, though qualifying his statements somewhat, 
still hold them in the main. All soils vary with time 
in their fertility ; bad lauds become good by proper 
treatment, and poor usage ruins the best of lands. 
Hence lands tend strongly to an equality when once 
brought into cultivation ; the rich lands lose most in 
fertility under improper tillage, while the poor lands 
gain most under proper tillage. When lands are badly 
cultivated, much more strength is taken from the good 
lands than from the poor, and they will therefore lose 
their fertility more rapidly. If wheat is raised on 
three grades of land yielding respectively ten, twenty, 
and thirty bushels per acre, and if nothing is done to 
replace the lost qualities, the best lands will decrease in 
fertility more rapidly than the others, since more is 
taken from the soil. By the time the capacity of the 
poorest land is reduced to nine bushels per acre, that 
of the better lands will be reduced to something like 
eighteen and twenty-seven bushels, and under continu- 
ous cultivation without manures the productivity of the 
lands would finally be on a par with that of the poor ; 
all lands thus handled would become equally poor, and 
rent from differences of soil would cease. 



28 THE PREMISES OF POLITICAL ECONOMY. 

On the other hand, if lands are properly cultivated, 
the poor lands will increase in fertility more rapidly 
than the rich. I have shown that if nothing is re- 
turned to the land it will soon become worthless 
through exhaustion. When lands are properly culti- 
vated a return is made, but this return is made to the 
land from which it was taken. If one field yields 
twenty bushels an acre and another thirty bushels, a 
farmer will not put three loads of manure on the good 
field to two on the poor field, but will place most of 
the manure, if not all, for a time at least, on the poor 
field, which will gradually yield more proportionally, 
and the difference in rent between the two fields will 
gradually lessen, and probably at length entirely cease. 

Variations in the rate of interest or wages change 
the value of lands. We call at present land in Kansas 
poor in comparison with land in New York, but this is 
not because the same labor will not produce as much in 
Kansas as in New York, but because interest and wages 
are higher in Kansas, so that land of equal fertility in 
the two States will not yield the same rent. But when 
interest and wages in Kansas fall to their level in New 
York, the land of both States will be classed as good, 
and the differences of rent will cease or at least decrease. 

The distribution of population also affects our esti- 
mation of the value of land. When a country is new, 
sparsely settled, and distant from a market, lands of 



RENT. 29 

great fertility will be classed as poor which a few gen- 
erations later, when the population has much increased, 
will be regarded as very good, and yield a large rent. 

In like manner a reduced cost of transportation 
alters our estimation of the value of land, causing us 
now to regard lands as good which a few years ago 
were classed as non-rent-producing. For these and 
similar reasons the proportion of the land on the earth 
regarded as poor is constantly decreasing. 

Ricardo and his school always speak of wheat lands, 
barley lands, pasture lands, etc., as if each field was good 
for one crop alone, and would be most profitable to its 
owner only when used in the cultivation of this particu- 
lar crop. Nothing can be more false than this view of 
the case. If any field is used to grow one crop only, 
it will decrease in fertility and soon yield little or no 
rent. Nothing in agriculture is better established than 
the necessity of a rotation of crops to prevent a loss of 
fertility. For this reason the value of land cannot be 
estimated by what it will produce of any one crop. 
An average must be struck from all the crops which 
must be raised to obtain the proper rotation. The 
fact that of a particular crop a piece of land will yield 
no more than enough to pay the cost of cultivation 
does not show that no rent can be paid for such land. 
Let us suppose that for a certain field, wheat, corn, 

grass, and pasture would give a proper rotation of 

3* 



30 THE PREMISES OF POLITICAL ECONOMF. 

crops. If a follower of Ricardo should pass by the 
field when sown to wheat, he would see some poor 
spots, and say that there is land which yields no rent. 
The next year he would see poor spots likewise in the 
corn crop, and on the following years in the land when 
used for a meadow and pasture, and from this would 
assert that although the farmer paid rent for all the 
land the rent of some of it was only nominal, and that 
here accordingly was a margin of cultivation which 
yielded no rent. A careful examination would reveal 
that the poor spots in the wheat were not those in the 
meadow ; that where no corn grew there was splendid 
pasture ; that in dry years the poor spots are here, in 
wet years there ; in short, that in a series of years every 
part may be in turn regarded as good and bad, and that 
the farmer can afford to pay rent for all, since some time 
during the series of years each part will make more than 
a return for labor and capital expended upon it. 

The plausibility of the Ricardian theory arises from 
the temporary circumstances attending the extension of 
cultivation. In this country, first it was New York 
that was on the margin of cultivation, then it was 
Ohio, then Illinois, and now it is Kansas and Ne- 
braska ; soon it will be Montana and other far-off ter- 
ritories. But none of these places stay at the margin 
of cultivation, and soon rent makes its appearance, and 
will in time become as high as in the oldest States. 



RENT. 31 

None of the differences which tend to augment 
rent are of a permanent character ; they are, on the 
contrary, of a very changeable nature. The order in 
which the lands were brouglit into cultivation affords 
no clue as to our present estimation of them. It may 
be granted that when we are obliged to extend the area 
of cultivation we always take what we regard the best 
of the uncultivated lands; but when these lands are 
once cultivated for a series of years we cannot say they 
yield no rent because they were last brought into culti- 
vation. Our estimation of their value has most prob- 
ably changed in the mean time. If a country is in a 
progressive state, all these differences of fertility will 
diminish, and probably in time cease; all land increas- 
ing in fertility under better conditions, the poorer ones, 
however, more rapidly, being most susceptible of im- 
provement. 

As I have stated before, I do not deny all the as- 
sumptions of the current theory of rent. I dispute 
only the one which claims that the price of the whole 
crop is determined by the cost of producing that por- 
tion raised at the greatest expense. The proof of this 
proposition is often presented in the following man- 
ner : If the price of produce was not sufficient to 
covei- this cost with ordinary profit there would be 
no inducement for farmers to continue the produc- 
tion of this the most costly portion of the crop, and a 



32 TEE PREMISES OF POLITICAL ECONOMY. 

farmer will not continue to produce at a loss ; on the 
other hand, if the price was more than sufficient to 
give the ordinary rate of profit new lands would be 
brought into cultivation, until the price of produce 
would be reduced to the cost of producing the most 
costly part. In this argument there is a fact of great 
importance overlooked which, when rightly considered, 
will change the whole view of the case. There is 
much labor to be performed before land can be culti- 
vated. The land must be cleared of timber, it must 
be drained, stones and other obstructions must be re- 
moved, and, lastly, the land must be ploughed and the 
ground prepared before a crop can be raised. If these 
facts were not true, if the new land could be cultivated 
with no more trouble than the old lands can be changed 
from one crop to another, then we might be able to 
predict that the poorest land would go out of cultiva- 
tion when the price of produce fell, and that more 
would be cultivated when the price rose. But nothing 
of the sort can be predicted. When new land is 
brought into cultivation the price must be high 
enough to remunerate satisfactorily those preparing the 
land for tillage, besides paying the cost of cultivating the 
crop ; but the land being once tillable, it will not cease 
to be used so long as the price of produce will repay 
the cost of cultivation alone. What has been expended 
in bringing the land into cultivation cannot be with- 



RENT. ■ 33 

drawn, nor will, the land be withdrawn from cultiva- 
tion because no return is obtained for this expenditure. 
Let us consider carefully the difference between these 
two elements, the one necessary to bring land into cul- 
tivation, the other to keep it there. If three thousand 
dollars must be expended to prepare a given farm for 
cultivation, and two thousand dollars and the labor of 
two men are required to cultivate it, then the farm 
will not be brought into cultivation until the price of 
produce will be sufficient to pay the wages of two men 
and the interest on five thousand dollars ; but when 
the land is once cultivated, it will not be withdrawn so 
long as the price of produce is sufficient to pay the 
wages of the two laborers and the interest on two 
thousand dollars. In other words, there might be a 
fall in price of produce equal to the interest on three 
thousand dollars without a reduction in the quantity 
of food produced. When lands have been once cleared 
of timber and brought into a proper state for cultiva- 
tion that work is done once for all, and the capital and 
labor so expended become intermingled with the nat- 
ural qualities of the soil. The revenue which the 
owner receives for such expenditure is properly to be 
regarded as rent, for it is governed by the laws of rent. 
Whether or no, return can be obtained for capital thus 
expended must depend on the causes which determine 
rent, and not on those which determine interest; and 



34 THE PREMISES OF POLITICAL ECONOMY. 

the fact that no return is obtained for money once ex- 
pended has no tendency to reduce the amount of pro- 
duction. But with the circulating capital used on the 
farm the case is different : if no return is obtained it 
will be withdrawn and cultivation cease. Buildings, 
fences, etc., when once made, do not last forever, but 
must constantly be renewed, and if the price of pro- 
duce falls so that the ordinary profit is not obtained 
on this capital, it will gradually be withdrawn and 
production will be in this way checked or reduced. 

It is clear, therefore, that the laws which regulate 
the bringing of new lands into cultivation, and those 
according to which land will be withdrawn from culti- 
vation, are very different, and that there is a large 
margin within which the price of produce may vary 
without a change in the quantity produced. Econo- 
mists usually confuse two very different things in their 
arguments on this point. When they say that a capi- 
talist will not bring new lands into cultivation unless 
the price of produce is sufficient to pay the cost of 
production, under this cost is included not only the 
cost of the labor necessary to cultivate the land, but 
also enough more to repay him for the cost of prepar- 
ing the land. When, however, they say, if the price 
of produce is not sufficient to repay the cost of pro- 
duction land will be withdrawn from cultivation, the 
term cost of production must be understood to exclude 



RENT. 35 

the cost of bringing the land into cultivation, and to 
include only a remuneration for the labor expended 
and interest for the circulating capital. Let us suppose 
that sixty cents a bushel as the price of wheat suffices 
to repay the cost of production, — in other words, that 
such a price will properly remunerate labor and pro- 
vide the interest on the circulating capital, — and that 
twenty cents on each bushel is needed to pay the 
interest on the capital expended in bringing the land 
into cultivation. Then the price of wheat must rise to 
eighty cents before new land will be brought into culti- 
vation, but must fall below sixty cents before any land 
will be withdrawn. No changes in price between these 
figures, sixty and eighty cents, will affect the quantity 
of wheat produced. 

If we keep these facts in mind we will see how 
faulty are the arguments supporting the doctrine that 
the price of the whole crop is determined by the cost 
of producing that portion which is produced at the 
greatest expense. There is always a large margin 
between the price which will remunerate those who 
bring new land into cultivation and that which will 
cause land to be withdrawn from cultivation. This 
margin is larger in old countries than in new ones, as 
those lands to the cultivation of which the obstructions 
are the least, which require the least clearing, draining, 
etc., will be the first cultivated, the subsequent addi- 



36 THE PREMISES OF POLITICAL ECONOMY. 

tions being necessarily made from lands more difficult 
of preparation. Prairie land will be cultivated before 
wooded lands, high and dry lands before low and wet, 
lands naturally rich before those which require manures 
to render them tillable. As the demand for food in- 
creases the price of produce necessary to cause new 
lands to be cultivated increases, but the price which 
must be paid to prevent land from being thrown out 
of cultivation tends to become lower than before, since 
every improvement lessens the cost of production on all 
the cultivated land. Thus if in a new country sixty 
cents for wheat be the lowest limit of possible fluctua- 
tion at that time and eighty cents the upper limit, as 
the country grows older and the demand for food in- 
creases the upper limit will rapidly rise to one dollar, 
one dollar and twenty cents, one dollar and forty cents, 
and so on, while the lower limit will probably, through 
improved cultivation, slowly decline to fifty-nine cents, 
fifty-eight cents, and still lower figures. For this rea- 
son, as the demand for food increases the farther will 
its price be from the cost of cultivating the poorest land 
that has been prepared for tillage, and a knowledge of 
this cost will not enable us to determine what is the 
rent of the better grades of land. 

The increase of the margin of fluctuation of values 
as the land of a country is gradually brought into use, 
causes the price of food to change more rapidly and 



RENT. 37 

to a greater amount than where only the easily culti- 
vated land is in use. If the supply of food exceeds 
the demand, the price falls below the lower limit before 
the supply will be reduced. On the other hand, a slight 
deficiency of the supply will force the price above the 
upper limit, since there will be no increase in the 
amount of land cultivated until this limit is reached. 
Mineral products, following the same law that agricul- 
tural produce does, show much more clearly the effect 
of the increase of the margin of fluctuation. The 
mines which are easily opened and prepared for use 
are first worked, and those having greater obstructions 
are resorted to when more mineral products are de- 
sired. An increased demand for mineral products 
causes so high a price that new mines with great ob- 
stacles to their use must be opened, but once in use 
these mines can be worked at so low a cost that the 
supply of mineral products will be reduced only after 
a great fall in their price. 

Gold and silver, being minerals, must also in time 
lose that firmness of value which has thus far made 
them so valuable as money. The supply from sources 
having but few obstructions either is, or soon will be, 
exhausted, and resort must be had to mines requiring 
much labor to open them up. The effect on the value 
of silver of the opening up of costly mines has been 
very marked during the last few years. From the 



38 THE PREMISES OF POLITICAL ECONOMY. 

present low price of silver, however, we cannot justly 
infer that the permanent cost of production has been 
reduced. The supply of silver has exceeded the de- 
mand, and as there are no mines in use which have a 
high cost of production, a great decline of price was a 
necessary consequence. When the mines now in use 
are exhausted the price will probably rise above its 
former price, with a liability of another great fall in 
value when new mines are brought into use. 

During modern times the rapid increase in the de- 
mand for food has kept its price steadily at the upper 
limit. There are, however, at the present time many 
indications that this will not be true in the future. 
We are probably nearing a period when the changes 
in the value of food will be as rapid, and to as great 
an amount, as is now the case with mineral products. 
A slight change in the relation of the supply to the 
demand will occasion a great change in the value of 
food wherever there is but little or no land at the mar- 
gin of cultivation, which will be withdrawn from use 
when the price begins to fall. 

In opposition to the theory of Ricardo I offer the fol- 
lowing, which will, I think, be found more in harmony 
with all the facts. Lands vary chiefly in two ways, 
in fertility and in the amount of obstructions necessary 
to be removed in order that they may be cultivated. 
Under obstructions are classed all hiuderances which, 



RENT. 39 

when once removed, do not require a continual outlay 
of capital and labor to keep the laud fit for cultiva- 
tion. All land must be drained, and most of it must 
be cleared of timber and stones, and other like ex- 
penses must be incurred. When, however, this is once 
done, no outlay of capital and labor is needful beyond 
the regular expense of cultivation. When a country 
is first settled the lands least obstructed are first culti- 
vated, as the population increases, and new lauds with 
greater obstructions to cultivation must be tilled, the 
price of produce must rise, since no one will bring any 
land into cultivation unless the price of produce is suf- 
ficient not only to repay the annual cost of cultivation, 
but also to give him the interest on the money laid out 
in subduing the land. Every increase in the demand 
for food requires the cultivation of more land, and this 
cannot be done until the price rises enough to repay 
the cost of bringing in new lauds. This cost is con- 
stantly increasing, the least obstructed lands naturally 
being brought first into cultivation. 

Besides the obstructions to the cultivation of laud 
there are differences of fertility, but these are very lim- 
ited in their nature and would not alone ever cause a 
very large rise in the price of produce. Fields sloping 
to the north are not so fertile as those sloping to 
the south, upland is not so fertile as valleys, in some 
places clay land may not be as good as sandy land, and 



40 THE PREMISES OF POLITICAL ECONOMF. 

in other places sandy land is inferior to clay, and so 
through all the categories of difference. In a very 
early stage of the growth of a country all these kinds 
of land were cultivated, and when afterwards new land 
is brought into cultivation, the obstructions having 
been removed, it falls into a class of lands already 
cultivated, and has no greater annual cost of cultiva- 
tion than other lands of the same class previously 
tilled. 

As is well known, Mr. Carey contends that the 
course of cultivation is always from the thin high 
lands to the rich bottom-lands, which cannot be at first 
cultivated by reason of their unhealthfulness and of 
the great and prolonged labor necessary for clearing 
and draining them. Whether this is always true, or 
true often enough to be regarded the general rule, is a 
matter of no moment to my position. What I con- 
tend is that at a time when the price of food was low 
our ancestors did cultivate as poor lands as any that 
are now left uncultivated, and that therefore, if the 
price should again fall to what it then was, poor lands 
would not go out of cultivation. That our ancestors 
cultivated high and thin land on the hills John Stuart 
Mill does not attempt to deny, but he asserts that at 
the present time in all old countries, as England and 
France, all, or nearly all, the fertile lands are culti- 
vated, and that the extension of cultivation is from 



RENT. 41 

the plains to the hills. This is doubtless true, but it 
must be remembered also that some of the lands on 
these same hills are already cultivated and have been 
for centuries, and that the lands yet untilled wlien 
once prepared for cultivation are no poorer than those 
first cultivated, the extension of cultivation having 
been from the hills to the valleys, and then back to 
the hills. Why the hills should be first cultivated is 
very apparent. The hills afforded better means of 
defence, they were healthier, and from the stand-point 
of our ancestors, obstructions to cultivation were there 
the least. These were all important facts to our fore- 
fathers, who had many enemies, poor tools, and few 
means of resisting disease. 

However, in the course of time, when our ancestors 
had obtained more knowledge and had the requisite 
security through improved government, they settled in 
the valleys and obtained a better return for their labor 
on the more fertile lands. But when they cultivated 
the valleys, why were not the less productive hill-sides 
abandoned ? There can be but one reply. The per- 
manent cost of production must have been a low one. 
The labor which had been expended to bring them into 
cultivation was permanently fixed and could not be 
withdrawn. The lands continued to be cultivated be- 
cause a return was obtained on the labor and capital 

annually expended on them, but no new lands of this 

4* 



42 THE PREMISES OF POLITICAL ECONOMY. 

class could be brought into cultivation so long as some 
of the more fertile valleys were unused. When the 
valley lands were all cultivated, and more food was 
needed on account of increased population, the price 
of food rose, so that it became profitable to cultivate 
new lands on the hills. In other words, the price of 
food was high enough to pay the annual cost of pro- 
duction and leave enough to pay the interest on the 
money expended to bring the lands into cultivation. It 
must not be forgotten, however, that hill lands have 
been in cultivation for centuries, and these new lands 
will have no greater annual cost of cultivation than 
those formerly tilled have, and this cost must be a low 
one, as they were cultivated when the price of food was 
at the lowest point of which we have any knowledge." 

All circumstances, whatever they be, which prevent 
new lands from being cultivated, but are no longer 
operative when lands are once in cultivation, I term 
obstacles to the extension of cultivation, and it is to 
these, and not to differences of fertility, to which the 
constantly-increasing price of food must be attributed. 

I will now present in summary the facts which show 
the defects of the current theory of rent. 

First. To obtain uncultivated land for tillage, far- 
mers must compete with those who can afford to pay 
rent for uncultivated land by using it for pasture, for 
wood, and many other similar purposes. For this 



RENT. 43 

reason the poorest land in cultivation must pay rent, 
since, if the farmers would not pay rent, the landlords 
would let it to herders and others who could afford to 
give much for the use of uncultivated land. 

Second. The greatest return is not obtained when 
all the land of a country is cultivated. There is great 
need of forests to secure a proper rainfall, and hence 
the question is not what is the difference between the 
best land of a country and the poorest, but what is the 
difference in the soils after the poorest are set aside for 
forests, poor lands being as useful for forests, as the 
good. When the proper amount of land is reserved 
there can be no doubt but that the remainder is fer- 
tile enough to yield a considerable rent. 

Third. The disadvantages of an unfavorable situa- 
tion alone can never cause any land to pay no rent. 
Home industries on a small scale are always productive 
enough to offer a price for food sufficient to yield con- 
siderable rent, and more than this price must be ob- 
tained before food will be sent to distant markets. 

Fourth. The fertility of land is not a fixed quan- 
tity, but by poor culture all lands soon become equally 
poor, while with a proper culture all lands improve 
rapidly, and even the poorest are soon fertile enough 
to pay a large rent. 

Fifth. The mass of the so-called poor lands do not 
lack fertility, but are rated poor because in our present 



44 THE PREMISES OF POLITICAL ECOJSlOMr. 

estimation their situation is unfavorable, because inter- 
est and wages are high, or the cost of transportation is 
great, and for other reasons which affect their present 
desirableness. Most, if not all, of these circumstances 
have their cause in the present distribution of popula- 
tion, and as population in the vicinity of these lands 
increases they will yield a large rent and be classed as 
good lands. 

Sixth. There are many obstructions to cultivation 
which must be removed. While the price of produce 
must bft high enough to remunerate the capitalists who 
remove them and prepare the ground for cultivation, 
when they are once removed, the price of produce may 
fall, and yet these lands will not be withdrawn from 
cultivation. 

Each of these facts shows plainly the defects of 
the Ericardian theory of rent, but when we consider 
them together they display much more glaringly the 
deficiencies of this theory, which attributes all rent to 
the original differences of soils. The original fertility 
of the soil is an element of but little relative impor- 
tance, since the obstacles which retard the cultivation 
of inferior lands are no longer in operation when these 
lands are once brought into use. 

One important problem in the discussion of rent I 
have purposely omitted. Does the demand for com- 
modities, and the kind and variety of the food con- 



RENT. 45 

Bumed, affect rent by changing our estimate of the 
relative value of lands differing in soil and climate? 
No soluticfn of the rent question can be had without a 
consideration of this important problem, but as the 
points involved are remote from those treated in the 
foregoing discussion, I will consider them separately in 
the following chapter. 



CHAPTER II. 

THE SOCIAL CAUSES PEODUCING A HIGH PRICE OF 
FOOD. 

Thus far only the physical capacities of the earth 
to produce food, and the conditions on which increased 
quantities of food can be obtained, have been examined. 
Now I wish to call attention to the importance of the 
reaction of the consumption on the production of 
wealth, and to the influence which the economy of the 
food-supply exerts on production. The current theory 
is that consumption has no influence on production, 
and that a demand for commodities is not a demand 
for labor. It determines merely the direction of labor, 
but not the quantity or efficiency of the labor, or the 
total aggregate of wealth produced. This proposition 
is set down by most economists as one of the most fun- 
damental and best established doctrines of Political 
Economy. This subject, like many others in Political 
Economy, is much obscured by the nature of the at- 
tack to which the current doctrine has been subjected, 
by which the attention of economists has been diverted 

from the real issue involved to questions almost frivo- 
46 



CAUSES PRODUCING HIGH PRICE OF FOOD. 47 

lous. It is against the popular notion that the extrav- 
agance of the rich is a blessing to the poor, by giving 
them employment, that the arguments of economists 
have been directed, and in so doing they have laid 
down propositions which, while strong enough to with- 
stand the opposition met with on popular grounds, are 
very weak when examined from another and more 
reasonable point of view. 

I shall first show the influence which changes in the 
demand for commodities have on the aggregate pro- 
duction whenever the change is from a commodity 
which nature can produce less abundantly to one capa- 
ble of being produced more abundantly. Of some 
commodities nature can produce more than of others, 
and if the more abundant are demanded a greater pop- 
ulation can be supported, and for their labor a greater 
proportional return can be had, than if something 
yielded by nature less abundantly was demanded. On 
a given area more rye can be obtained for the same 
labor than wheat, and more corn and potatoes than rye, 
and in many climates more rice than corn or potatoes. 
Hence if corn or potatoes are demanded for food in- 
stead of rice, a much smaller population can be sup- 
ported, and a still smaller if rye is wanted, while 
wheat will support the smallest population of all. 
But this is not all, for by examining the laws of nature 
more closely we shall find that the abundance in which 



48 THE PREMISES OF POLITICAL ECONOMY. 

nature can produce given articles varies with the 
changes of climate and soil. Some climates and soils 
are naturally adapted to wheat, some to oats, others to 
rye, barley, or potatoes, and still others to rice, sugar, 
and other tropical products, while other parts are best 
fitted for the pasture of cattle. If this is true, a 
change in the demand for food, from commodities of 
which under the circumstances nature can produce but 
small quantities to those which can be produced in 
greater abundance, will increase both the gross and 
average return for labor, and at the same time bring 
about a more equal distribution of wealth. Let us 
suppose the demand for wheat has been so great as to 
cause not only all natural wheat lands to be sown to 
wheat, but also some of the potato lauds. This would 
not only cause a much greater proportional expenditure 
of labor than if a less quantity of wheat was demanded, 
but also a great increase of rent on the good wheat 
lands, all of which would come out of the consumers' 
revenue. If the demand for food should change so 
that less wheat and more potatoes were wanted, the 
price of wheat would fall, the demand being supplied 
from a better class of wheat land than before, while 
the price of potatoes would not rise, or at least not rise 
as much as the price of wheat fell. The community 
then would have a double gain, less labor would be 
required to supply its demand for food, and rent 



CAUSES PRODUCING HIGH PRICE OF FOOD. 49 

would fall; lands poor in their capacity to produce 
wheat being no longer cultivated for wheat but for 
potatoes, for which they are especially adapted. 

Ricardo, in discussing the causes of rent, views the 
whole world as used for the production of a single 
article, and because any one article cannot be raised on 
all soils and in every climate at an equal cost of labor, 
he grades all land according to its power of producing 
some one article, and then shows that rent will rise as 
lands less fitted for the production of this article are 
used for its production. Certainly if the people de- 
mand only wheat, for instance, as food, they must pay 
a high rent ; but this does not prove that an increase 
of population necessitates arise of rent. Suppose there 
are four classes of land, of which the first is best 
adapted for wheat, the second for rye, the third for 
corn, and the fourth for potatoes. If only one article 
were in demand, so that all the four classes of land 
must be used for its production, every extension of 
cultivation would be accompanied by a rise in the price 
of food. On the other hand, if all of these articles 
were desired, and the demand for each article was in 
proportion to the land best fitted for its production, 
there would be no rent from differences in fertility, or at 
least much less rent than if only one article were pro- 
duced. The rise of rent merely shows that there is 

too much of some one kind of food demanded, and 
c d 5 



50 THE PREMISES OF POLITICAL ECONOMY. 

does not prove that more food cannot be obtained 
without increasing the cost of production. 

Besides the difference of climate and soil, the rota- 
tion of crops has a great effect on the quantity pro- 
duced, and to have a proper rotation there must be a 
demand for all the products required for the rotation ; 
and a change in the demand for commodities which 
allows a better rotation of crops causes a much greater 
quantity of food to be obtained with no greater ex- 
penditure of labor. 

If nature produces some articles of food more 
abundantly than others, and some articles grow more 
advantageously in one climate or soil than in others, 
and if any soil will produce a variety of articles by a 
rotation of crops in greater abundance than one article, 
the population which a country can support cannot be 
determined without a knowledge of what the iuhab- 
tants will demand for food. A much greater popula- 
tion can be provided with subsistence if they demand 
for food what nature can produce most abundantly 
than if they demand something of which nature can 
supply but a very limited quantity. So much has this 
fact been misunderstood that many economists have 
maintained that those nations prospered best who used 
the most expensive food. The use of wheat and beef 
is regarded as indications of a high standard of life, 
while the use of potatoes and rice is looked upon as the 



CAUSES PRODUCINO HIGH PRICE OF FOOD. 51 

cause of the misery and degradation of the countries 
which use them as the chief articles of diet. There is 
a seeming justification of this view in tlie conditions 
of those countries which use a cheap and abundant 
kind of food. ludia, Egypt, and Ireland, where po- 
tatoes, rice, and other like articles of food are used, 
have a much lower standard of life than England, 
where wheat, beef, and other food-stuflPs, which cannot 
be supplied by nature except in more limited quan- 
tities, are demanded. Wherever the tendencies pro- 
ducing an unequal distribution of wealth are strong 
there can be no doubt that a nation runs a great 
danger in the introduction of a cheap article of food, 
since by the use of such a food the probabilities of 
increasing the effects of the unequal distribution are 
much augmented. So long as a dear kind of food is 
used, those of the laborers who wish to better their 
condition can, by using a cheaper food themselves, ob- 
tain a great advantage, which will aid them much to- 
wards their improvement ; if, however, all the laborers 
use the cheaper food, those desiring to save have no 
advantage, and are thus practically without hope of 
improvement, and all remain in a low and degraded 
state, while the few to whom the benefit of an unequal 
distribution comes enjoy all the produce of the in- 
dustry of the people. On the other hand, if there 
is no danger of an unequal distribution, or if a nation 



52 THE PREMISES OF POLITICAL ECONOMY. 

adopt proper means to overcome the tendencies in this 
direction, the advantages of cheap food are very ap- 
parent, as a much greater population can be supported 
with a much less expenditure of labor than when only- 
dear food is used. 

The use of cheap food must not be confounded with 
the use of a single article, such as potatoes or rice, for 
a diet ; for the laws of nature are so arranged that a 
mixed diet is always the cheapest. For a time land 
will produce one article, such as potatoes or wheat, very 
abundantly, but the fertility will soon decrease unless 
the crop is changed and some other article is raised, 
since only by a proper rotation of crops can the fertil- 
ity of the soil be maintained or increased. So, too, as 
climates and soils are different, nations can supply their 
wants by exchange, and get many articles of food with 
less labor than if they attempted to raise them at 
home. The cheapest food then will contain all the 
variety necessary to support life, and will be in har- 
mony with the tastes and inclinations of all who are 
willing to adjust themselves to the natural conditions 
by which the gross and average return for labor is 
increased. 

Even when the amount of the food-supply is known 
the number of the population which it supports cannot 
be determined, unless it is also known what commodities 
this population will demand. Some commodities are 



CAUSES PRODUCING HIGH PRICE OF FOOD. 53 

richer in food-material than others, and the consumption 
of these will create a larger demand for land than the 
consumption of the others, and if such articles be used, 
only a much smaller population can be supported. It 
is usually regarded as axiomatic by economists that 
each person requires a fixed quantity of food, and when 
the food-supply is known the amount of the population 
can be inferred ; but this is not true. Food is not only 
used to support life, but is also largely consumed for 
the mere pleasure which the consumption gives, so that 
almost every one, if he has the means, consumes two or 
three times as much as is needed for the preservation of 
life and health. Wherever this is done not only is the 
population much reduced, but also the sum of the pleas- 
ures to be obtained by each one is greatly diminished, 
since other pleasures of a different kind are lost when 
the food is consumed instead of being converted, as it 
may be, into other kinds of enjoyment. The pleasure 
derived from food is exclusive, and is only enjoyed 
by the person who consumes the food, while many 
other pleasures can be enjoyed by a great number with- 
out any more expenditure of labor than if they were 
produced for the pleasure of one person. The different 
sources of enjoyment presented by a pleasant dinner 
illustrate clearly the various degrees of exclusiveuess 
which different pleasures possess. The floral decora- 
tions, the table furniture, aud the tasteful preparation 

5* 



54 THE PREMISES OF POLITICAL ECONOMY. 

of the food can be enjoyed by all alike. These pleasures 
do not depend on the amount of food as do the pleas- 
ures procured by consuming the edible dishes. The 
latter pleasures are exclusive and demand an increase 
of food for each additional person enjoying it. 

Compare, again, the pleasure derived from beer and 
music. For each additional glass of beer additional 
labor is required, and if a double quantity is demanded, 
twice the amount of labor is needed in general to pro- 
duce it. This increase of expense is not true of music, 
since a large number of persons can be entertained 
with music by an orchestra with no more labor than if 
the number was small. That one enjoys the music does 
not debar another from a like enjoyment, but the 
enjoyment of both is rather increased by the fact that 
they have a common pleasure. The same lack of ex- 
clusiveness in consumption is true of books, — a book 
that would exchange for twenty glasses of beer can be 
enjoyed in turn by a thousand people, while, if the 
beer had been purchased instead of the book, but 
twenty of the thousand would have had any enjoy- 
ment, and the rest would have been excluded. Art is 
also similar to music and books in the amount of 
pleasure that can be derived from a small expenditure 
of labor and of the food-supply. So many persons 
cannot enjoy a painting simultaneously as can enjoy a 
piece of music, but as the painting lasts for a long 



CAUSES PRODUCING HIGH PRICE OF FOOD. 55 

time while the music does not, the painting is in time 
capable of giving as much pleasure at as little cost as 
can be obtained by any other means. 

The examples which have been given lie at the ex- 
tremes in regard to labor and the consumption of food 
necessary to produce a given amount of pleasure. 
Beer and other articles of like character require the 
greatest amount of labor and consumption of food, 
while music, books, and art require the least, in propor- 
tion to the amount of pleasure obtained. Between 
these extremes are innumerable other commodities, 
some requiring more and others less labor and con- 
sumption of food in their production, and thus they 
approximate one or the other of the class of commodi- 
ties above mentioned. 

The number of acres required to produce the food 
and liquor of each person determines the population 
of any section and the demand for labor. If the aver- 
age person requires twenty acres to produce what he 
eats and drinks, there is but one-half the demand for 
labor that there would be if he consumed only the pro- 
duce of ten acres and exchanged the produce of the 
other ten acres with artisans for other commodities. 
This fact can be well illustrated by taking many parts 
of the South, where every farmer has a still to make 
his own liquor, and raises his own tobacco and corn, 
but has little or no exchange with the outside world. 



56 THE PREMISES OF POLITICAL ECONOMY. 

Suppose in such a society there should be a change of 
demand from liquor and tobacco to clothes. This de- 
mand for cloth would cause an increased demand for 
labor. All the labor formerly employed to produce 
the tobacco, and grain for liquor, would now be em- 
ployed in raising food for the cloth-makers, while more 
cloth must be made to supply the increased demand. 
If now the people desired good houses, and reduced 
their consumption of food in the form of liquor and 
tobacco still more, they would permit the population 
to increase, and the additional laborers could find em- 
ployment in building houses. 

There is another important circumstance affecting 
the consumption of food in the degree of exclusiveness 
of family life. Where each family lives in seclusion, 
having a private house, preparing its own food, and 
doing all other work without any co-operation, the 
consumption of the food-supply is many times greater 
than it would be if the same families should so live as to 
allow the proper degree of division of labor. Certainly 
in the cooking and serving of food alone at least half 
of it is wasted or rendered worthless by the inefficiency 
of the labor employed in private life. It is a neces- 
sary disadvantage of private life that the labor be un- 
skilled, as no person can wash, cook, and perform all 
the other work of a family with as little waste and as 
efficiently as the labor could be performed under con- 



CAUSES PRODUCING HIGH PRICE OF FOOD. 57 

ditions where each person is engaged in one occupation 
only. AYhere bread is made in a bakery, the same 
material will make much more bread and of a better 
quality than where each family bakes for itself. For 
example, take the difference in this respect between 
America and Germany. In Germany all bread is 
made in a bakery, while in America most of it is 
baked at home. It is no exaggeration to say that Ger- 
man rye-bread is more palatable than the wheat-bread 
served up on the ordinary American table. It is only 
when furnished with the finest qualities of wheat-flour 
that the ordinary cook can produce edible bread, while 
a baker can produce a better article with the poorest 
of wheat. The same waste is true of every department 
of private life, and when the present mode of living 
becomes modified so as to allow a greater division of 
labor, there will be an important economy of the food- 
supply, and a much larger population will be provided 
with subsistence without an increase of cost. 

The amount of labor that can be employed in a 
country depends on the economy of the food-supply, 
and any change in consumption from commodities 
which draw largely on the food-supply to those re- 
quiring less land for their production, creates a de- 
mand for additional labor, and allows for an increase 
of population. So also a change in the demand from 
commodities which give only brief pleasure to those 



58 THE PREMISES OF POLITICAL ECONOMY. 

giving pleasure for a longer time, or to more persons 
at one time, will increase the demand for labor and the 
gross amount of pleasures to be enjoyed by the people. 
Clothes last for enjoyment a longer time than tobacco. 
A change of demand from tobacco to clothes will not 
only increase the demand for labor, but also the amount 
of pleasure to be enjoyed, since by the additional labor 
more is produced, and what is jjroduced gives pleasure 
for a longer time than the former product. In the 
same way a demand for beautiful houses instead of fine 
clothes adds to the amount of the pleasures which any 
community has to enjoy, since houses last longer than 
clothes, can be enjoyed by many at the same time, and 
do not draw so largely on the food-supply, while public 
parks, museums, libraries, and musical concerts encroach 
still less on the food-supply, as they are most permanent 
in their effects, and the enjoyment of them by one per- 
son does not exclude the enjoyment of them by others. 
As each individual demands commodities that will 
require the use of additional land for their production, 
or as he consumes his wealth in a manner which 
excludes others from enjoying his wealth with him, 
the demand for land increases and rent and the price 
of food rise. An unequal distribution of wealth is the 
result, and this cause brings about other changes, which 
increase still further the demand for land and raise 
the price o^ food. Rich persons, as a class, do not 



CAUSES PRODUCING HIGH PRICE OF FOOD. 59 

desire commodities so much for the pleasure which 
can be derived from them as for the display of their 
wealth. It is the rareness of an article which makes 
it desirable to them. Cheap things which all may 
have are passed by, and commodities are sought after 
of which there are not enough to supply the wants of 
every person. This spirit soon pervades all classes, 
each person desiring articles rarer and more costly than 
those lower in life can afford to purchase. Fashion- 
able articles are desired and new clothes are purchased 
before utility demands a change, thus causing a great 
waste of labor and material. The desire to excel 
others is also visible in the desire of the rich to have 
all their amusement in private, although a multitude 
might have the pleasure without increase of cost. 
Their libraries, their art collections, their parks, must 
be their exclusive property, not because their pleasure 
is thereby increased, but because the possession of such 
treasures is beyond the means of ordinary people. 
This desire for rare and costly articles, especially when 
accompanied by the desire of individuals to have them 
for their exclusive use, creates a demand for land and 
raises the price of food. So long as this spirit prevails 
to as great a degree as at present, the present high price 
of food will continue; and this spirit must cease before 
cheap food and an equal distribution of wealth are 
possible. 



60 THE PREMISES OF POLITICAL ECONOMY. 

The effect of a change of demand from commodi- 
ties requiring a large consumption of the food-supply 
to those better economizing it, is as marked on the 
distribution of wealth as on the production. Let us 
suppose ten men working together, four of whom 
produce the food-supply, while six are engaged in 
making other articles desired for consumption. Each 
man would have a right to one-tenth of what is pro- 
duced, and as the amount of food produced is but 
four-tenths of the gross production, any four of the 
men could, by taking all their share in food, exhaust 
the whole supply and leave the other six without food. 
The knowledge or fear that they would do this would 
break up the whole social arrangement and cause each 
one to work by himself, or the price of food would rise 
and that of other commodities fall until there was no 
danger that any one would demand more than his share 
of food. No one could live without food, and every one 
would give the whole produce of his labor rather than 
perish ; hence if the six engaged in other than agricul- 
tural pursuits were determined to exchange what they 
produced for food alone, they would reduce the value 
of their produce until the whole produce of each would 
procure but one-tenth of the food-supply, which is the 
same amount that they would have received had they 
in the first place consented to an equitable exchange 
and not endeavored to obtain only food for their pro- 



CAUSES PRODUCING HIGH PRICE OF FOOD. 61 

ductions, while they have lost the share of one an- 
other's production which they would have obtained by 
a just division. 

If each person increases his demand for food, either 
the number of the people in a country must be reduced, 
or a greater part of the labor must be devoted to the 
production of food. In either case there is a decline of 
civilization, as where nothing but food is produced, 
however abundant it may be, there is no civilization, 
and such a society will be low and ignorant. This 
shows that there is a condition to a high civilization 
which is nearly always overlooked. A high civiliza- 
tion requires that the labor of each should be ex- 
changed for much more than enough to support the 
laborer, but he must not endeavor to obtain food in 
exchange for all his labor. The amount of food for 
which the labor of each will exchange is the measure 
of his wages. It shows how many of the laborers can 
be spared from the production of food to produce other 
articles. For each laborer, however, to endeavor to ob- 
tain food for all his wages would destroy the civiliza- 
tion, or cause such an unequal distribution of wealth that 
the wages of each would only suffice to purchase the 
amount of food necessary for existence. If the people 
in any society do not choose to scatter, and each one raise 
food for himself, they must content themselves with 
the food necessary for their support, and each take his 



62 THE PREMISES OF POLITICAL ECONOMY. 

share of the other commodities produced, or they will 
force upon themselves such an unequal distribution 
of wealth that their wages will furnish them but a bare 
living. The latter alternative is what most societies 
take, and as a result wages are at a minimum and the 
price of food high. Every one endeavors to get more 
than his share of food, and as there is no way in which 
the part can be made equal to the whole, they obtain 
no more than if they had consented to take an equi- 
table share, and at the same time they lose all their 
share of the other products of labor. 

The demand for commodities of which nature can 
produce but very limited quantities, and the desire for 
food to be consumed for mere pleasure over and above 
what is sufficient to maintain health, are the important 
causes of the high price of food. Many times the 
present amount of food might be obtained, with no 
increase of the proportional cost, if the people would 
be content with a diet containing the different articles 
of food in that proportion which will allow the land 
to be employed in the production of those commodities 
for which it is best fitted; and the same food would 
supply many times the present population if it were 
only used to preserve health, and not consumed in ad- 
ministering to an appetite for intoxicating drinks or 
otherwise wasted through ignorance and a lack of 
appreciation of what inexclusive pleasures are. 



CAUSES PRODUCING HIGH PRICE OF FOOD. 63 

In addition to these limitations of the food-supply 
caused by ignorance and prejudice, there are still greater 
contractions of the field of employment produced by 
the lack of appreciation of future as contrasted with 
present rewards, and hence capital is not accumulated 
to the proper amount, and the resources of all coun- 
tries are but partially developed. To emigrate to new 
countries also requires capital, and where wages are 
low and the people ignorant, they have not the means, 
and often not even the desire, to go where wages are 
high and food is cheap. Thus the very fact that the 
price of food is high prevents the increase of food, as 
it causes an unfavorable distribution of Avealth and an 
increase of ignorance, and prevents such a distribution 
of population as would increase the supply of food and 
remedy the unequal distribution of wealth. 

In this connection only a reference can be made to 
another important cause of the high price of food, as a 
subsequent chapter will be devoted to its discussion. 
When there is free competition, the power of producers 
to survive does not depend on the gross produce of in- 
dustry, nor on the efficiency of their labor, but on the 
surplus which can be given as rent. If the produce 
of one class of laborers is but one-half that of another 
class, the first class will displace the second if they de- 
mand less than one-half the wages. As the wants of 
cheap and inefficient laborers are small, and their rate 



64 THE PREMISES OF POLITICAL ECONOMY. 

of increase is rapid, they have the power of under- 
selling when furnished with capital at a low rate of 
interest. Paying a higher price for food, and more as 
rent, they drive the more efficient classes out of the 
field of employment, and at the same time they so re- 
duce both the gross return for industry and the field of 
employment itself that a much smaller population can 
be supplied with food than would be supported by the 
more efficient laborers whom they have displaced. 

For these reasons it is evident that food is high in 
price not because any limit to the food-supply has been 
reached, but because the field of employment is so 
small to the ignorant and inefficient classes demanding 
the wrong commodities, and not willing to save for 
themselves. The obstacles to the increase of food and 
population are not physical in their nature. They are 
the result of ignorance and prejudice, and so long as 
they continue to flourish in their present force there 
cannot but be a high price for food and an unequal 
distribution of wealth. 

From the foregoing discussion it will be seen a high 
price of food is not the result of a pressure of popula- 
tion against the means of subsistence that could be 
utilized if men were willing to conform to the condi- 
tions imposed by nature for the increase of the food- 
supply. Men impose unnatural limitations on them- 
selves, and thus limit their field of employment, and 



CAUSES PRODUCING HIGH PRICE OF FOOD. 65 

as a result they must pay a high price for food. Men 
have a tendency to reduce their food-supply below their 
actual wants, and thus cause an artificial pressure of 
population upon the means of subsistence which they 
are willing to utilize. 

This tendency to limit the food-supply is true not 
only of man, but of all animal life. The pressure of 
the increase of animal life is not on all the means of 
subsistence, but only on those kinds of food which can 
be obtained under simple conditions. To use two 
or more sources of food requires more intelligence and 
a higher organism than does the use of but one kind 
of food. An abundance of food induces animals to 
use only those kinds of food which can be obtained 
with the least effort, and these are the varieties of food 
which can be obtained under the simplest conditions. 
For food obtained under simple conditions a simple 
organism is the fittest organism, and the instincts which 
accompany a low form of organic life lead the animal 
to reject all sources of nourishment except those whose 
conditions are so simple that only a small effort will 
supply its wants. Animals, as well as man, have a ten- 
dency to economize labor, and an economy of effort 
causes a decline of intelligence where the wants of an 
animal can be supplied under simple conditions. The 
simpler the organism the higher is its rate of increase, 

and the increase in numbers soon causes a pressure 
e 6* 



(}g THE PREMISES OF POLITICAL ECONOMY. 

upon the means of subsistence which are utilized. The 
tendency to increase and the tendency to limit the food- 
supply are thus brought into conflict, and as a result in 
those animals in which these tendencies are weakest, 
some of the instincts and habits which limit the food- 
supply are broken down and a new species is formed, 
with a more complex organism, capable of acquiring 
more kinds of food, or the same food under more 
varied conditions. The simplest organisms, not the 
fittest organisms, tend to survive. Only when the in- 
crease of simple organisms have exhausted the food- 
supply that can be obtained under simple conditions 
will animal life develop and maintain the more com- 
plex organisms and that intelligence necessary for their 
existence where food can be obtained only under com- 
plex conditions. 

Evolution does not arise from a primary tendency in 
animal life for the fittest to survive. It is the result 
of two apparently injurious tendencies, — the tendency 
to increase and the tendency to limit the food-supply. 
These two tendencies, always operating together, cause 
the simpler organisms in whom these tendencies are 
strongest to monopolize the means of subsistence ob- 
tainable under simple conditions, thus forcing those 
animals in whom these tendencies are weaker into more 
complex environments, where higher organisms and 
more intelligence are needed. 



CAUSES PRODUCING HIOH PRICE OF FOOD. 67 

In the original man the tendency to limit the food- 
supply can be clearly seen, and in all the various social 
states through which he has developed up to the pres- 
ent time he has never failed so to limit the supply of 
food as to check the natural growth of population, and 
thus bring about an unequal distribution of wealth. 
The uncivilized races have numberless superstitions 
about food by which a large part of it must be rejected, 
and thus the supply is reduced. Each tribe will not 
eat cattle of a certain color. Here striped cattle are 
prohibited by one superstition ; there the spotted ani- 
mals are for a similar reason rejected, and travellers 
among such tribes often have great difficulty in feeding 
their followers, as no one kind of food can be pro- 
cured which all will eat. Large quantities of food are 
given by these tribes to their idols or gods ; and often 
their departed ancestors, being supposed still to relish 
food, must be conciliated by having a portion of what 
there is to eat set aside for them. At the same time 
the production of food is greatly limited by other 
usages and customs, which prevent the use of many 
tracts of land which otherwise would probably be 
cultivated. 

"When these tribes develop into nations having a 
higher civilization they lose many of these supersti- 
tions and customs limiting the food-supply, but others 
are retained, or adopted, which prevent the use of the 



68 THE PREMISES OF POLITICAL ECONOMY. 

greater part of the resources offered by the land of the 
country for the production of food. There is a strong 
tendency merely to utilize some one, or at least but very 
few, of the resources which might be developed. Some 
nations subsist only on the cattle which they herd, 
others cultivate some one plant, like rice or potatoes, 
which grow almost spontaneously in some regions, and 
still others live almost entirely on bread and meat, 
neglecting, and often despising, the many other means 
of subsistence which nature has placed at their disposal. 
The original man was a slave to his appetites and 
passions, and enjoyed only those pleasures which are of 
a physical nature. As he did not conform in the least 
to the demands of nature, he had only those means of 
subsistence, such as berries, fish, and game, which nature 
furnishes without labor. A partial conformity to nature 
has caused the cultivation of naturally fertile land 
where the obstacles to cultivation are few. Here, how- 
ever, the progress of civilization has been stopped, be- 
cause no race has yet been willing to subordinate the 
physical and exclusive pleasures of life to those ob- 
tained from the consumption of other kinds of wealth 
which would so harmonize with all the demands of 
nature as to allow the use of all land in the most pro- 
ductive manner, and thus cause the removal of the 
more formidable obstacles to the extension of cultiva- 
tion. 



CAUSES PRODUCING HIGH PRICE OF FOOD. 69 

There is aa obvious connection between the field of 
employment open to any people and the number of 
qualities in them which are sufficiently developed to- 
influence their consumption. To those who desire but 
few things which thrive without labor the land of any 
country can furnish only a small supply of food, and 
to get this food they must live in small tribes separated 
so widely from one another that little commerce or di- 
vision of labor is possible. As the development of the 
qualities inherent in men cause an appreciation of new 
modes of consumption, the land is gradually put to. 
more productive uses. Additional men can be em- 
ployed in agriculture, and the better cultivation of the 
land will allow a greater proportion of the whole pop- 
ulation to be engaged in other work than the produc- 
tion of food. The development of each additional 
quality in men causes them to value new qualities in 
land capable of increasing their sources of enjoyment, 
induces them to economize food so as to be better able 
to satisfy their new desires, and leads them to a better 
appreciation of the future, which makes them willing 
to accumulate more capital and acquire additional skill. 
It may be truly said that the development of each ad- 
ditional quality puts mankind in a new world. With 
its aid not only is a new field of employment dis- 
covered, but the old one has a different aspect, since 
all its qualities are valued from an altered and more 



70 THE PREMISES OF POLITICAL ECONOMY. 

rational stand-point. Just as the use of larger and 
more powerful telescopes continually brings into view 
many-fold more stars than were before visible, and at 
the same time gives a new and more perfect view of 
those formerly observed, so also the gradual bringing 
into activity of new qualities in men causes a great in- 
crease of the opportunities to labor, and an enlarged 
return for labor in the field of employment before in 
use. 

The greater the conformity to nature the more will 
all the qualities in land be brought into use, and the 
larger will be the ratio of the good land to the poor. 
On the other hand, when any nation endeavors to in- 
crease production without a greater conformity to nat- 
ural conditions on the part of the people, there will be 
an increasing proportion of poor land as compared with 
the good. A nation first cultivates those soils which 
are considered by the people to be the best, and these 
are always those where food can be obtained under the 
most simple conditions. If their estimate of the land 
does not change on account of a better adjustment of 
themselves to nature, they can supply the wants of an 
increasing population only from soils less fitted than 
those before in use for the production of the commod- 
ities desired by those not conforming to nature. Only 
the development of those qualities in man which change 
his estimate of land, will cause an increase both of the 



CAUSES PRODUCING HIGH PRICE OF FOOD. 71 

quantity of land cultivated and of the ratio of the 
good land to the poor, allowing all land to be used for 
what it is best fitted. 

From the qualities of the soil alone cannot be deter- 
mined whether or not a given tract of land is good 
land. The demand for food and the use which is 
made of capital and skill are likewise important factors 
in determining our estimate of land. For this reason 
rent, when accompanied by a high price of food, is not 
the result of a natural monopoly. It is caused by the 
survival of classes or races who, contrary to nature, en- 
deavor to use the whole world for the production of a 
few articles of food of which but small quantities can 
be grown, and who adhere to methods of production 
which economize to the greatest extent possible the use 
of capital and skill. When such men survive, a 
greater conformity to natural conditions being thus 
prevented, land less productive of the desired articles 
of food must be cultivated as the demand for food in- 
creases. The present high price of food and the arti- 
ficial pressure of population on the means of subsist- 
ence are due to this lack of conformity to nature, and 
only by a better adjustment to natural conditions can 
we hope to preserve a low price of food and increase 
the average return for labor. 



CHAPTER III. 

THE LAW OF POPULATION. 

An intelligent discussion of the doctrine of Malthus, 
which affirms that population tends naturally to in- 
crease faster than the means of subsistence, requires an 
accurate understanding of the terms and the method of 
proof used in this famous law. The whole controversy 
depends on the meaning of the terms natural and means 
of subsistence, and on the method employed to estab- 
lish what is natural and what are the correct indica- 
tions of the exhaustion of the food-supply. I have 
already discussed the limits of the increase of the food- 
supply, and have shown that there are two very differ- 
ent limits, the ultimate and highest productivity of the 
whole world and the practical limit determined by the 
amount of knowledge and capital possessed by man- 
kind. What the whole world can produce and what 
may be obtained from the field of employment which 
the knowledge and capital of mankind allows them to 
occupy, are clearly independent problems, and require 
very different treatment. In his argument, Malthus 
overlooks the point of greatest importance, namely, 

the influence which the means used to increase subsist- 

72 



THE LAW OF POPULATION. 73 

ence has on the increase of population. An increase 
of food obtained without the aid of man would doubt- 
less have no effect on his rate of increase, yet when the 
co-operation of man is required to increase subsistence, 
the changes brought about by the new environments 
required to procure additional food might alter the 
whole nature of man. That population tends to in- 
crease faster than the means of subsistence prepared /w 
it, does not prove a tendency to increase faster than the 
means of subsistence prepared by it. There is a small 
amount of produce prepared for man, and a large 
amount that can be prepared by him with the aid of 
knowledge and capital. Beyond a doubt population 
tends to increase rapidly where the field of employment 
is small, little or no skill and capital being required, 
but this fact does not decide that such an increase is 
natural to a society in the very different environments 
necessary to make the whole earth its field of employ- 
ment. 

First, then, how are we to know whether this cause 
is natural or not? The method of proof used by 
Malthus is well known ; to discover the natural 
strength of the tendency of population to increase, he 
considers its effect when comparatively unimpeded by 
principles of an opposite tendency. He found that in 
new colonies, where the tendency has the fewest checks, 
population frequently doubled itself in twenty-five 



74 THE PREMISES OF POLITICAL ECONOMY. 

years, and then concluded that this rate of increase 
represented the natural force of the tendency, and that 
this was the rate at which population always tends to 
increase. There are many objections to this method 
of reasoning which will quickly appear when we apply 
it to the investigation of other subjects. Suppose that 
we wished to determine the natural tendency of men 
to steal. If the Malthusian method is correct, we 
ought to find a place where the theft tendency is unre- 
strained by opposing principles. Unfortunately, we 
should not have to search long to find places where 
people steal as naturally and constantly as new colo- 
nies increase in population. And what conclusion can 
we legitimately draw from this ? According to Mal- 
thus, we must conclude that all men are natural 
thieves, and that thieving would be as common as eat- 
ing but for the fear of consequences. 

By the same method of reasoning we could prove 
that all men are natural drunkards, cannibals, adul- 
terers, and murderers, since we find communities in 
various parts of the world where drunkenness, canni- 
balism, etc., are common. The method is necessarily 
faulty, as it overlooks the fact that time and circum- 
stances ultimately will change our desires and charac- 
ters so completely that we learn to love a line of con- 
duct which formerly would have been most unpleasant 
to us, and disliking what we formerly desired, what is 



THE LAW OF POPULATION. 75 

natural of one time and place becomes most unnatural 
of another. 

In every part of economic investigation the term 
natural is used not to denote what men would do if 
unrestrained by any surrounding circumstances, but to 
denote what they Avill do in given external circum- 
stances if they are allowed a free choice. Under some 
circumstances they will naturally do one thing, and 
under other circumstances other things. It is not be- 
cause it is natural that Americans buy cloth of Eng- 
land. It is natural to do that by which the greatest 
return may be obtained for their labor, and when they 
can obtain their cloth with the smallest expenditure of 
labor by exchanging with England they are inclined to 
do it. 

The mistake of Malthus is the same as that of Ri- 
cardo in the natural rate of wages. There is always a 
rate of wages which will be just sufficient to support 
the laborer and bring up a new generation to supply 
their places, and this, says Ricardo, is the natural rate 
of wages. More wages would cause a too rapid in- 
crease of population, and a fall of wages to the natural 
rate ; while a smaller rate would decrease the number 
of laborers and thus cause a rise of wages. Why were 
economists compelled to abandon this view ? Because 
it overlooked the fact that what is natural changes with 
the intelligence and moral character of the laborers 



76 THE PREMISES OF POLITICAL ECONOMY. 

and with changes in political and social institutions. 
Economists rightly say, we cannot affirm what the 
laborers will naturally do unless we know all about the 
surrounding circumstances. 

The distinction between the lessening of the tendency 
to overpopulate and the checking of this tendency can 
be well illustrated by the grades on a railroad. So 
long as the grades exist all hinderances to free move- 
ment of the train are checks to the tendency of the 
train to move, but any change in the level of the track 
by which the grade is reduced will lessen the tendency 
of the train to move down-grade, and the track being 
brought to a level, the train will have no tendency to 
move. There are in the present social state many 
causes influencing men to increase population, and 
whatever counteracts these causes is a check to its 
increase. Any change in the social state which will 
remove these causes lessens the tendency to over- 
populate, and if they should all be removed there 
would be no such tendency, and hence no need of 
checks. 

Malthus overlooks completely those causes which 
lessen the tendency to increase or incorrectly classes 
these with moral restraint. Our tastes and inclinations 
change with alterations in our ideas or surroundings, 
and what is natural in one group of circumstances is 
most unnatural in another. As an example take the 



TEE LAW OF POPULATION. 77 

tendency to drink spirituous liquor, which is at present 
almost as powerful and universal as the tendency to in- 
crease population. "Where liquor is in common use and 
desired by all, if any one, believing it hurtful, should 
resist his inclinations and cease to drink, the eifort 
could be properly classed as a moral check to the ten- 
dency to drink. If, however, his children were so 
educated as to have an aversion to its use, having no 
desire for stimulants, moral restraint is not needed to 
keep them from drinking. Children, having no ten- 
dency to use liquor, need no restraint, while the father, 
having a tendency, needs a moral restraint. The 
changes in the desires and appetites in the case of 
drinking illustrate what is gradually being brought 
about in regard to overpopulation. With the progress 
of civilization circumstances arise which reduce the 
inclination to marry, and even the power to propagate 
the race, and these altered surroundings cannot be 
classed either among moral restraints nor among any 
other kind of checks to overpopulating, since by them 
the need of any checks is removed. 

It is now often asserted that the doctrine of Malthus 
has at length been settled beyond controversy by the 
discoveries of Darwin, showing the tendency of man- 
kind to increase beyond the means of subsistence to be 
only a particular instance of a general law pervading 

all organic beings. There being in all organic life a 

7* 



78 TSE PREMISES OF POLITICAL ECONOMY. 

capacity to increase in a geometrical ratio, any species 
of animal could in a small number of years overspread 
every region of the earth which had a climate suitable 
for its existence. Certainly there is a seeming unison 
in these two doctrines, yet a closer examination will 
reveal a lack of harmony. The view of man which 
Malthus takes is of that nature in which all species of 
animals were in his time regarded. Man was thought 
to have a definite set of attributes, which were unalter- 
able and unmodified by change in surrounding circum- 
stances. The doctrine of Darwin is the very opposite 
of this, the surrounding circumstances determining all 
the characteristics of animals, the latter changing with 
the former. If reasoning on the Malthusian plan, 
Darwin would proceed as follows : What is tlie natural 
rate of increase inherent in all animals ? For its dis- 
covery the race of animals must be taken which has 
the most rapid rate of increase, this being the race 
where the natural rate of increase is least impeded by 
principles of an opposing character. The natural rate 
of this species being determined, it is then concluded 
that all other animals would have this rate but for the 
above-mentioned opposing principles. Such a method 
is necessarily absurd, there being no natural rate of 
increase inherent in all animals. Every species having 
its own rate, if we are to consider them as all having a 
common parentage, then we must also decide that the 



THE LAW OF POPULATION. 79 

rate of increase of each animal, along with other pecu- 
liarities, is the result of its environments, and that it 
changes as these are altered or modified. If man is no 
exception to the general law of animal life, his rate of 
increase must also be determined by his surroundings 
and change with them, and there being no natural rate 
for all mankind, each society must be studied in its 
peculiar environments if we would discover the rate of 
increase. 

Each animal is adapted to certain climatic condi- 
tions and kinds of food. The climate being favorable 
and the food abundant, the tendency to increase is 
strong, and the animal spreads over all the territory 
suited to it and provided with a supply of the desired 
food. Having reached its limit its spread and increase 
are stopped, but that does not show that all the means 
of subsistence are exhausted. Where is there an ani- 
mal whose range is as extensive as of the things on 
which it subsists ? Are lions and tigers found every- 
where that deer or other similar animals exist? Cer- 
tainly not. Clearly, then, the lack of subsistence can- 
not be the cause why they do not spread and increase. 
The cause must be sought in the inability of the lion 
or tiger to adapt themselves to the more varied condi- 
tions of climate and the like. If these animals had 
more intelligence they doubtless could conform to the 
circumstances of more extended regions, where their prey 



80 THE PREMISES OF POLITICAL ECONOMY. 

is abundant, and in the want of intelligence rather than 
of subsistence can be seen the real limit of their increase. 
In this connection there is yet a problem to investi- 
gate with reference to the meaning of the tendency of 
population to increase. There is a broad distinction 
between the tendency of mankind to propagate and a 
tendency of population to increase. The individuals 
of a society may have a strong tendency to propagate, 
and yet the society have no tendency to increase. There 
is a difference between the seed of a plant and a child. 
The ripe seed requires no help or sustenance from the 
plant, but provides for itself, while the child does need 
aid and food, and without them would perish. The 
simple tendency to propagate in plants, unaided and 
unopposed, would result in an increase of plants, but 
a similar tendency in mankind would not increase pop- 
ulation. For a child to arrive at manhood parents 
must feel some love for children, and be willing to 
provide them with food and other necessities. How- 
ever true it may be that all races have too strong a 
tendency to propagate, it is not true that all races have 
an equal tendency to cherish and provide for their off- 
spring. So weak are these tendencies usually, that the 
most stringent laws are necessary to compel parents to 
support and properly care for their children. There 
are besides these other causes which alter the tendency 
to increase population. Mankind is subject to many 



THE LAW OF POPULATION. gl 

diseases that cannot be prevented. From climatic 
and other unavoidable causes many die prematurely, 
and by so much is the tendency to increase lessened. 
For these reasons, to know the tendency of population 
to increase in any place we must know much more 
than what is the natural tendency to propagate. We 
must also ascertain the love of parents for children, 
their willingness to provide for them, and the una- 
voidable dangers from disease and other circumstances. 
When we have found out these facts we can know the 
strength of the tendency to increase population, and if 
we further discover the rate at which the means of 
subsistence is enlarging, we can determine whether or 
not there is a tendency to overpopulate. The effect of 
a tendency to overpopulate is to augment through war, 
famine, and the increase of disease the premature 
deaths to such an extent as to cut off the surplus pop- 
ulation. An examination of the various races of men 
will make it evident that the tendency to increase pop- 
ulation at the present time, in most races at least, is so 
strong as to be detrimental, but this gives us no reason 
to infer, as does Malthus, that it is natural and con- 
stant, and that moral restraint will always be necessary 
to keep it from injuring society. 

There is, however, a much greater objection to the 
method of investigation used by Malthus than the 
misuse of the word natural. He examined only what 
/ 



82 THE PREMISES OF POLITICAL ECONOMY. 

kept population down, and disregarded the causes which 
led to an increase of production. No decision can be 
reached on the relation of population and the means 
of subsistence without an investigation both of the 
checks to population and of the causes of the increase 
of food. When this is done, it will be immediately 
perceived that Mai thus has enumerated among his 
checks to population the causes why the food-supply 
increases at all. He affirms that prudence is a check to 
population. It is, however, to the exercise of prudence 
that all the increase of food is due. No civilization at 
all is possible without the use of capital, and how is it 
possible to obtain capital without the use of prudence ? 
Why do men save and accumulate capital if not to 
better their condition ? Yet Malthus classes this desire 
to better one's condition among checks to population. 
It is, however, the cause of all increase of the food- 
supply, since to it is due all capital and all increase of 
skill and knowledge. The so-called prudential checks 
are really not checks at all in the sense that they are a 
restraint on population. They allow and cause an in- 
crease of population, but at the same time they regu- 
late it and make it slower than it tends to be where 
they are not in force. On the other hand, the ten- 
dency to increase, unrestrained by prudence, does not 
increase population, but decreases it. Prudence is re- 
quired to obtain capital and skill, and where these are 



THE LAW OF POPULATION. 83 

not population decreases instead of increases, on ac- 
count of the limited field of em[)loyment possessed by 
societies who do not save or educate. 

Malthus and all his followers assume, without any 
investigation, that the high price of food is caused by 
natural and not social obstacles to the increase of food, 
and that wherever there is a high price of food the 
supply is so nearly exhausted that an unjust distribu- 
tion of wealth does not even aggregate the evils of 
overpopulation, but only causes them to be somewhat 
earlier felt than otherwise. There are many reasons 
for doubting this assumption, and I shall endeavor to 
show that there is no connection between a high price 
of food and the exhaustion of the food-supply, that a 
high price of food only occurs in those societies where 
the natural resources are undeveloped or wasted, and 
that it is only by so conforming to natural conditions 
as to allow a low price of food that a society can exist 
with intelligence and capital sufficient to exhaust the 
food-supply. 

The only kind of a society where there is a pressure 
of population on the food-supply is in the original 
state where no capital is used, and where man only 
consumes what he finds, doing nothing to increase his 
means of subsistence. The amount of fruit, berries, 
eggs, and wild game is strictly limited, and population 
must limit itself to their amount, and if more persons 



84 THE PREMISES OF POLITICAL ECONOMY. 

are born than can be fed, they must die of starvation 
or disease. So long as the Indians live on buffaloes 
there is a ratio between their number and that of the 
buffaloes. With a given number of buffaloes only a 
given number of Indians can live, and whatever the 
food of people in such a state of society may be, the 
law is the same ; as they do nothing to increase the 
food, they must limit themselves to their food by pru- 
dence, or suffer from want and disease and other posi- 
tive checks to population. This, however, is all 
changed when men discover that they can increase the 
food-supply by labor exerted previous to the time of con- 
sumption. The labor expended before the produce is 
needed, we call capital j and so long as the return of labor 
can be increased by the use of capital the relation is that 
of population to capital, and not that of population to 
subsistence, as it was before. These very different 
relations are regarded by most economists as ide»tical, 
and economists pass over from the conclusions derived 
from one of these relations to those of the other as 
if they were the same. Only so long as men merely 
consume and do not produce, can prudence act as a 
check to population, or be rightly regarded as a check. 
When men begin to produce by means of capital, pru- 
dence is no longer a check to population. It is the 
cause of its increase, since all capital is the result of 
the exercise of prudence, deferring consumption in 



THE LAW OF POPULATION. 85 

order to enjoy increased consumption at some future 
time. In such a society there is on one hand the desire 
of immediate consumption, and on the other the desire 
for the increased consumption which can be obtained 
by deferred consumption, and on the comparative value 
of the present and the future depends the amount of 
population which can be supported. Whatever in- 
creases the regard for future welfare allows an increase 
of population, and whatever augments the desire for 
immediate consumption checks the increase of popula- 
tion. 

Here, then, we have a very different view from 
that presented by Malthus. His prudential checks no 
longer operate as they did on the original society 
merely to check population. They now are the cause 
of its increase in opposition to the positive checks 
which render the future uncertain, and hence increase 
the desire for immediate consumption, and thus check 
the growth of population. As the desire for future 
consumption and the amount of capital increases, more 
land is cultivated, and a larger population can be sup- 
ported, while the increase of population is checked by 
any increase of the desire of immediate consumption. 
Such a society is divided into two classes, — capitalists, 
who prefer an increased but deferred consumption, aud 
the laborers, who choose immediate consumption. 
When labor tends to increase faster than capital the 



86 THE PREMISES OF POLITICAL ECONOMY. 

rate of wages falls, and continues to fall, until the 
too rapid rate of increase of population is checked by 
the diminishing returns obtained for labor. In the 
rate of wages we have a criterion by which to deter- 
mine the force of the tendency to overpopulate, for 
where wages are low the tendency is strong. The 
tendency to overpopulate, not overpopulation, is the 
cause of low wages. Where this tendency is strong and 
wages are low, labor being inefficient and unskilled, 
less is produced than if the tendency to overpopulate 
were weaker, and less being produced, and the produce 
less skilfully and more wastefully used, a smaller pop- 
ulation can be supported than where the tendency to 
overpopulate being weaker, wages are high enough to 
enable the laborers to become intelligent and skilful. 

I wish to emphasize the contradictions in which 
writers become involved when they confound two 
problems so essentially different. Mankind suffers 
from a want either of capital or food, one or the other, 
but not from want of both. The want of capital arises 
from social causes, the want of food from physical ones. 
In the latter case it is the niggardliness of nature which 
causes their suffering, in the former it is social and not 
natural causes which have prevented the increase of 
food and caused its high price. If the doctrine is cor- 
rect that more capital will always employ additional 
labor, then it is not true that we are now pressing 



THE LAW OF POPULATION. 87 

against the means of subsistence. By far the greater 
part of the world is yet open for the employment of 
capital, if it were obtainable. Besides, there never was 
a time in the world's history when the population was 
as well supplied with food and at so little outlay of 
labor as at the present time. By this, however, is not 
meant that the price of food is lower, for this is not 
true, but that a smaller proportion of the population is 
engaged in agriculture than ever before ; and this, not 
the price of food, is the true test. On the other hand, 
the lack of capital is to be seen on every side. The 
rate of interest is not the proper criterion of the plen- 
tifulness of capital. A low rate of interest only means 
that capital can be obtained at a low rate by those who 
can give good security ; the mass of mankind cannot 
give this security, their desire for immediate enjoy- 
ment being so strong that they will neither save for 
themselves nor prudently invest capital which others 
would willingly place in their hands if capitalists were 
sure that they would use it properly. 

The societies in which the price of food is high are 
those in which the people are divided into separate 
classes, capitalists and laborers. The laborers not being 
under the necessity of exercising prudence, increase 
rapidly, while the rapid increase of capital lowers 
the rate of interest; and the result of these two in- 
fluences is a rise in the price of food and a fall in the 



88 THE PREMISES OF POLITICAL ECONOMY. 

value of other commodities, — changes which transfer 
the greater part of the revenues of the country to the 
landlords. In such a country only cheap labor and 
capitalists willing to save at a low rate of interest can 
survive, for such a combination can force the price of 
food so high, and the price of other commodities so 
low, as to displace the other and better classes, who can- 
not offer to landlords such favorable terms. Here we 
have a high price of food, and at the same time an 
ignorant and inefficient population tending to increase 
too rapidly. This only shows that there are social 
causes which allow the ignorant part of the population 
to survive. Hence the seemingly universal proposition 
of Malthus is really but a particular one, no account 
being taken of the rate of increase of the classes which 
the social arrangement permits to be displaced by their 
inferiors. The high price of food in such a society 
comes from a limit to the field of employment open to 
surviving combinations of cheap labor and low interest. 
This furnishes no indication of an exhaustion of the 
food-supply. The prevailing prejudice and ignorance 
cause the available resources tc^be but partially used, and 
prevent whole countries from being inhabited at all. 

The preceding arguments show that the high price 
of food is not the result of natural laws, but of igno- 
rance, prejudice, and an unequal distribution of wealth. 
To this Prof. Cairnes objects thus : 



TEE LAW OF POPULATION. 39 

" It matters not whether the obstacles be physical or 
natural, whether absolute and insuperable, or the result 
simply of prejudice and ignorance, so long as they are 
efiPectual in preventing the cultivation of the countries 
in question. So long as this is the case these countries, 
to all practical intents and purposes, may be said not to 
exist for us. They can no more be counted on as 
means of supporting a population than the countries in 
the moon." 

What Prof. Cairnes shows is that uncultivated coun- 
tries and other unused resources are of no practical 
account so long as the ignorance and prejudice remain, 
but that is not what he and other Malthusians set out 
to prove. Their original proposition is that population 
naturally tends to increase faster than subsistence, while 
what they make out is that population increases too 
rapidly where ignorance and prejudice cause an ill dis- 
tribution of wealth. The best way to show the weak- 
ness of Prof. Cairnes's argument is to apply his reason- 
ing another way. Besides food men need water, both 
to drink and for cleanliness, and just as valid a ratio 
can be shown between the increase of population and 
the supply of water as between population and the 
supply of food. Population increases according to a 
geometrical ratio, while the supply of water at best 
only increases in an arithmetical ratio, and the effect of 

bringing together the two different rates of increase 

8* 



90 TRE PREMISES OF POLITICAL ECONOMY. 

will be just as striking as the contrasting of the in- 
crease of population and that of subsistence. So we 
must conclude that population naturally increases faster 
than the water-supply, and that the amount of popu- 
lation is always proportional to the supply of water. 
Certainly the lack of cleanliness has caused many times 
more deaths than the lack of food ever caused, and the 
fact that men die from lack of cleanliness shows that the 
supply of water has been exhausted. It is, however, 
objected that the brooks and rivers are full of water, 
which could have been used but for the ignorance of the 
people and their prejudice against cleanliness, and that 
many times the present population might be supplied 
with water if they would go to the brooks and rivers 
to get it. To this Prof. Cairnes, if consistent, would re- 
ply, that it matters not whether the obstacles are physi- 
cal or moral, or the result simply of prejudice and igno- 
rance, so long as they are effectual in preventing the 
bringing and using of the water; and that so long as 
this is the case these brooks and rivers, to all practical 
purposes, may be said not to exist for us. 

The argument that the increase of population is 
checked from want of water is certainly as well- 
founded as the argument that population is checked 
from want of food, and any argument ever brought 
forward to prove one position can be equally well ap- 
plied to prove the other. All that can rightly be in- 



THE LAW OF POPULATION. 91 

ferred from either proposition is that so long as igno- 
rance and prejudice have their present force, the whole 
supply of either food or water cannot be utilized, great 
suffering is produced, and population remains much 
less than it would otherwise be. Outside of this ques- 
tion of what people will do when swayed by ignorance 
and prejudice, there is a problem of great importance. 
What are the real limitations of the increase of food 
and water? To the solution of this problem neither 
Malthus nor any of his followers has made any im- 
portant contribution. From all their arguments it 
could not be inferred whether the real limits of the 
increase of mankind will be a want of water or of 
food, for their conclusions merely show that there must 
be a limit to population, and not what that limit is. 

The mistake of Malthus was that he investigated 
only the rate of possible increase inherent in those 
classes who do nothing to increase the food-supply, and 
neglected to examine the influence on the increase of 
population of those conditions by which the food- 
supply is increased. To these conditions men must 
conform if population is to increase, and the question 
of importance is what men naturally do who comply 
with the conditions necessary to increase the food- 
supply, and not what men will do who will not adapt 
themselves to the environments necessary to a high 
civilization. The latter class must pass away if civili- 



92 THE PREMISES OF POLITICAL ECONOMY. 

zation progresses, and their places be supplied by others 
who better conform to natural conditions. Only those 
can remain who appreciate the future enough to accu- 
mulate capital, and will use the food which nature sup- 
plies most abundantly, and who will consume food only 
as a means to preserve health, and take their pleasures 
in such a manner as is most conformable to the general 
good. It is only by such as these that the world can 
be fully populated ; and so long as men do not show 
these characteristics the population of the world must 
remain small in proportion to what it might otherwise 
be, and the distribution of wealth will be so unfavor- 
able as to cause a low rate of wages and a high price 
of food. 

Only as the development of the qualities in men 
opens up to them new sources of pleasure will they 
adjust themselves better to nature and increase the 
food-supply. So long as the appetites and passions of 
men have their original force, those means of enjoyment 
which afford an immediate pleasure will be preferred 
to those that augment the pleasures of the future rather 
than those of the present. The original man takes his 
pleasure to-day, putting off his burdens and pains until 
to-morrow. On the other hand, he who conforms to 
nature takes up his burdens to-day and enjoys a much 
greater stock of pleasures on the morrow. He produces 
before he consumes, while his ancestor consumed before 



THE LAW OF POPULATION. 93 

he produced. The supply of food can be increased only 
as men learn to place the pain before the pleasure, and 
those qualities which must become active in men before 
they will place production ahead of consumption will 
also cause them to prefer pleasures having no painful 
reaction to those like the pleasures tending to increase 
of population, which have so many undesirable con- 
sequences. The conditions allowing the increase of 
food can be complied with only as production is placed 
further and further ahead of consumption. This will 
be done only as the qualities leading men to prefer de- 
ferred to immediate pleasures gradually become more 
developed, and as they develop the original appetites 
and passions become weaker. 

We can thus determine beforehand in what manner 
the very nature of man must be altered to utilize all 
of the productive forces of nature. Those habits and 
customs which limit the food-supply must be broken 
down, those appetites and passions which cause men to 
prefer immediate to deferred pleasures must be weak- 
ened or lost, and the desire of exclusive pleasures must 
be displaced by a love of those pleasures whose enjoy- 
ment does not exclude the mutual enjoyment of others. 
Just as the course of a river is fixed by the slope of the 
land through which it flows, so the natural conditions 
which surround man determine what changes in his 
pleasures must be made and what qualities in him must 



94 THE PREMISES OF POLITICAL ECONOMY. 

be developed before an increased quantity of food can 
be obtained for a growing population. The tendency 
to overpopulate must be reduced to comply with the 
conditions for enlarging the means of subsistence, and 
there is no reason to believe that the rate of increase of 
those who conform to the natural conditions by which 
they are surrounded will be greater than their means 
to increase the food-supply. 



CHAPTER IV. 

THE RELATION OF RENT TO WAGES. 

The produce of a country is divided into three 
parts, rent, profits, and wages; these being the terras 
used to denote the reward received by the landlords, 
capitalists, and laborers for the assistance rendered by 
each to production. If this be correct, to know what 
the share of any one factor is, it would seem necessary 
to know what the shares of both the other factors are. 
To know what the amount of wages is, it must be 
known what is the amount of both rent and profits, 
or to determine what profits are, we must know the 
amount of rent and wages. The current theory of 
wages and profits does not recognize this relation, but 
proceeds to determine wages and profits without any 
reference to rent. Wages, we are told, depend upon 
profits, rising as profits fall, and falling as profits rise. 
John Stuart Mill, in his discussion of profits, puts the 
case as follows : 

" It thus appears that the two elements on which, 

and which alone, the gains of capitalists depend, are, 

95 



96 THE PREMISES OF POLITICAL ECONOMY. 

first, the magnitude of the produce; in other words, 
the productive power of labor ; and, secondly, the pro- 
portion of that produce obtained by the laborers them- 
selves; the ratio which the remuneration of the la- 
borers bears to the amount they produce. These two 
things form the data for determining the gross amount 
divided as profit among all the capitalists of the coun- 
try; but the rate of profit, the percentage on the 
capital, depends only on the second of the two ele- 
ments, the laborer's proportional share, and not on the 
amount to be shared. If the produce of labor were 
doubled, and the laborers obtained the same propor- 
tional share as before, — that is, if their remuneration 
was also doubled, — the capitalists, it is true, would gain 
twice as much ; but as they would have had to ad- 
vance twice as much, the rate of their profit would be 
only the same as before." 

If whatever of the ultimate produce of industry is 
not profit is wages, from what source do the landlords 
receive their share ? Certainly from some source they 
obtain a large revenue, and where could they get it if 
all the produce of labor goes to increase wages and 
profits ? The importance of this question is not over- 
looked by Mill, but he claims that no practical error is 
produced by disregarding rent, and promises to show 
this in a subsequent chapter on rent to which he refers. 
To this explanation I wish to call especial attention, 



THE RELATION OF RENT TO WAGES. 97 

because the correctness of Mill's position is of the 
greatest importance both in the discussion of wages 
and also of free-trade. 

As is well known, these subjects were elucidated by 
Adam Smith before the law of rent was known. All 
his demonstrations rest on the supposition that produce 
is divided into two shares only, wages and profits, what- 
ever is not resolvable into one of these elements being 
resolvable into the other. When the law of rent was 
discovered by Ricardo, it being evident that produce 
was divided into three shares instead of two, the 
greater part of Political Economy was worked over 
and rent put in its proper place. This, however, was 
not done in the discussion of wages or of free-trade. 
These subjects still continue to be discussed as though 
there were only two factors among whom the produce 
of industry is to be divided, and rent is either ignored 
or eliminated from the discussion. The latter is the 
method employed by Mill, and if the reasoning by 
which he accomplishes this is unsubstantial, all his 
discussion of wages, as well as free-trade, is defective. 
The element of rent must be introduced and the course 
of reasoning modified to meet the altered conditions 
before correct results can be obtained. 

I quote in full Mill's explanation, given at the close 
of his chapter on rent, of the reason that no practical 
error arises in disregarding rent and supposing that all 



98 THE PREMISES OF POLITICAL ECONOMY. 

the advances of the capitalists consist in the wages of 
the laborers. 

" After this view of the nature and causes of rent, 
let us turn back to the subject of profits, and bring up 
for reconsideration one of the propositions laid down 
in the last chapter. We there stated that the advances 
of the capitalist, or in other words, the expenses of pro- 
duction, consist solely in wages of labor, that whatever 
portion of the outlay is not wages is previous profit, 
and whatever is not previous profit is wages. Rent, 
however, being an element which it is impossible to 
resolve into either wages or profit, we were obliged for 
the moment to assume that the capitalist is not required 
to pay rent, — to give an equivalent for the use of an 
appropriated natural agent, — and I undertook to show 
in the proper place that this is an allowable supposi- 
tion, and that rent does not really form any part of 
the expenses of production, or of the advances of the 
capitalist. The grounds on which this assertion were 
made are now apparent. It is true that all tenant 
farmers and many other classes of producers pay rent. 
But we have now seen that whoever cultivates land 
paying a rent for it, gets in return for his rent an in- 
strument of superior power to other instruments of the 
same kind for which no rent is paid. The superiority 
of the instrument is in exact proportion to the rent 
paid for it. If a few persons had steam-engines of 



THE RELATION OF RENT TO WAGES. 99 

superior power to all others in existence, but limited 
by physical laws to a number short of the demand, the 
rent which a manufacturer would be willing to pay for 
one of tiiese steam-engines could not be looked upon 
as an addition to his outlay, because by the use of it 
he would save in his other expenses the equivalent of 
what it cost him ; without it he could not do the same 
quantity of work unless at an additional expense equal 
to the rent. The same thing is true of land. The 
real expenses of production are those incurred on the 
worst land, or by the capital employed in the least 
favorable circumstances. This laud or capital pays, as 
we have seen, no rent, but the expenses to which it is 
subject cause all other land or agricultural capital to be 
subjected to an equivalent expense in the form of rent. 
Whoever does pay rent gets back its full value in 
extra advantages, and the rent which he pays does not 
place him in a worse position than, but only in the 
same position as, his fellow-producer who pays no rent, 
but whose instrument is one of inferior efficiency." 

Notice the difference between what Mill starts out to 
prove and what he finally succeeds in showing : " The 
advances of the capitalist consist solely in wages of 
labor, and whatever portion of the outlay is not wages 
is previous profit." This is what he was to show, but 
the proposition which he does prove is very different 
from this : " Whoever does pay rent gets back its full 



100 THE PREMISES OF POLITICAL ECONOMY. 

value in extra advantages, and the rent which he has 
to pay does not place him in a worse position than, but 
only in the same position as, his fellow-producer who 
pays no rent." 

What Mill succeeds in proving is merely that it 
makes no difference to the capitalist whether he pays 
rent or wages. Whether wages go down and rent goes 
up, or wages rise and rent falls, is all the same to the 
capitalist. His profits and advances are not affected 
by a change which causes the shares of one factor to 
be diminished if at the same time the other propor- 
tionally increases. 

A few examples will illustrate clearly the insufficiency 
of Mill's argument. Let us suppose two sections of 
a country having an equal amount of agricultural 
produce, and in one of them the land is of unequal 
fertility, the rent being equal to one-quarter of the 
produce, while in the other all the land has the same 
fertility of the poorest land in the first section, and 
hence no rent is paid. In this case the advances of the 
capitalists in the first section would be three-quarters 
to the laborers and one-quarter to the landlords, while 
in the second all the advances would go to the laborers. 
The amount advanced in each case would be the same, 
as the amount of the produce is the same. The recip- 
ients, however, are different, and for each seventy-five 
laborers employed in the first section one hundred 



THE RELATION OF RENT TO WAGES. IQl 

laborers would be employed in the second. Mill is 
right in saying that it is all the same to the capitalist 
whether he hires seventy-five laborers and pays an 
amount equal to the wages of twenty-five laborers to 
landlords or employs one hundred laborers and pays no 
rent. Yet this does not show that all the advances of 
the capitalist in the first case consist in wages of the 
laborers. The landlord coming in the place of twenty- 
five laborers gets their wages, and the result to the 
capitalist is just the same as if these laborers had been 
employed and no rent paid. The landlord is a nomi- 
nal laborer, who, doing no work, receives his share of 
the produce along with the real laborers who do the 
work. Of course it is the amount of the advances, and 
not who gets them, that interests the capitalist; but 
Mill promised to prove an entirely different proposi- 
tion, namely, that all the advances of the capitalists 
went to the laborers. This proposition, which is neces- 
sary to maintain his position on the wages question, he 
did not prove ; he merely stated it and then passed to 
the discussion of another point. 

The error involved in disregarding rent becomes evi- 
dent when we consider the nature of the doctrine estab- 
lished by disregarding it. Mill wishes to establish the 
fact that wages fall as profits rise, and rise as profits 
fall. By these terms are meant not the absolute, but 

the proportional share received by each. The rate of 

9* 



102 THE PREMISES OF POLITICAL ECONOMY. 

profit, we are told, depends upon the laborer's propor- 
tional share, and not on the amount to be shared. A 
proportional share of the produce certainly goes to rent 
even if no rent is paid on some part of the produce. 
If thirty per cent, of one-fourth of the produce is rent, 
twenty per cent, of the second fourth, ten per cent, of 
the third, and none of the fourth, then fifteen per cent, 
of the whole produce is rent, just as much as if fifteen 
per cent, of every part of the produce is rent. The 
advances of the capitalists would be the same in one 
instance as in the other, and hence it is evident that 
the rate of profit cannot be determined by knowing the 
proportional share of the laborer alone, but only when 
the proportional shares of both laborers and landlords 
are known. 

There is still another method of showing that Mill's 
position is incorrect. He asserts that if the produce 
of industry were doubled and the laborers obtained the 
same proportional share as before, the rate of profit 
would also remain the same, not being increased at all. 
Let us suppose that, the land of two grades being culti- 
vated, each grade producing a half of the food-supply, 
there was difference enough in their productivity to 
give ten per cent, of the whole produce of industry 
to the owners of the better land as rent, and that of 
the remaining produce the laborers received seventy 
per cent., leaving twenty per cent, as profit. If the 



THE RELATION OF RENT TO WAGES. 103 

produce of industry were doubled the better grade of 
land would now produce enough to supply the whole 
demand for food, and rents would fall to zero. The 
laborers receiving the same proportional share as be- 
fore (seventy per cent.), profits would be raised from 
twenty to thirty per cent. I have taken this simple 
case to make the falsity of Mill's argument more 
evident, yet the same result would follow in more 
complex cases. To be sure, if the produce of land 
were doubled all rent would not disappear, still no 
one can doubt that such an increase of produce would 
reduce rent. Even if it were not reduced in amount, 
its proportional share would be less, since if ten per 
cent, were rent before the doubling of the produce, the 
landlords receiving none of the additional produce, rent 
would now be but five per cent, of the whole return 
for labor, and, the laborers receiving seventy per cent, 
as before, profits would be raised to twenty-five per 
cent., a gain of five per cent. 

In his chapter on ultimate analysis of the cost of 
production. Mill again endeavors to prove the de- 
pendence of wages on profits by showing that the 
value of any commodity is determined not by wages, 
but solely by the quantity of labor which it costs to 
produce that commodity and bring it to market. 

" The value of one thing," he says, " must always 
be understood relatively to some other thing, or to 



104 THE PREMISES OF POLITICAL ECONOMY. 

things jn general. Now, the relation of one thing to 
another cannot be altered by any cause which affects 
them both alike. A rise or fall of general wages is a 
fact which affects all commodities in the same manner, 
and therefore affords no reason why they should ex- 
change for each other in one rather than in another 
proportion. To suppose that high wages make high 
values is to suppose that there can be no such thing as 
general high values. But this is a contradiction in 
terms, the high value of some things is synonymous 
with the low value of others." 

The fallacy in this argument arises from the use of 
the term commodity with two meanings. With one 
meaning it denotes everything bought or sold, while 
with the other its use is restricted to those articles capa- 
ble of indefinite increase, whose values are determined 
by the quantity of labor necessary to produce them. 
If all commodities could be made in any quantity de- 
sired without an increase of cost, a rise of wages affect- 
ing all commodities alike could not influence values. 
There are, however, many commodities, of which the 
articles of food are the most important, whose values 
are not determined by the quantity of labor necessary 
to produce them. If one-third of the labor of a coun- 
try is devoted to agriculture and two-thirds to other 
commodities, one-half of these commodities will not 
usually have as great a value as the agricultural pro- 



THE RELATION OF RENT TO WAGES. 105 

duce, yet they are the produce of an equal amount of 
, labor. Indeed, it might easily happen that the value 
of the agricultural produce might exceed the whole 
value of all the other labor. 

There being two classes of commodities, the value 
of one depending, the value of the other not depending, 
on the quantity of labor required to produce them, the 
value of one class can increase at the expense of the 
other. Such a change not affecting all commodities in 
a like manner, a rise in the rate of wages would in- 
crease the value of those commodities whose cost de- 
pends on the quantity of labor necessary to produce 
them, and decrease the value of the other class of com- 
modities, composed of food and the like. It is easy to 
illustrate how these changes are brought about. There 
being no rent in a new colony, when the best land only 
is cultivated, all commodities, including food, will ex- 
change in proportion to the labor needed to produce 
them. "When, however, the increased demand for food 
requires the cultivation of inferior land, the agricultu- 
ral produce will not exchange with other commodities 
in the same ratio as before. A bushel of wheat will 
exchange for more cloth, cutlery, or other like articles 
than when no rent was paid. As rent is raised through 
the resort to inferior lands to supply the increasing de- 
mand for food, a bushel of wheat will gradually ex- 
change for more and more cloth, and the greater the 



106 THE PREMISES OF POLITICAL ECONOMY. 

value of the wheat the less will be the value of the 
cloth and other commodities whose values depend 
solely on the quantity of labor needed for their pro- 
duction. On the value of these latter commodities 
depends the rate of wages, and it will fall as the value 
of agricultural produce rises and rent absorbs a greater 
part of the whole produce of industry. Supposing one 
hundred yards of cloth to be the result of one week's 
labor, and the same work to be necessary to produce ten 
bushels of wheat on the best land, so long as no rent 
is paid they will have an equal value, and a week's 
wages will be equal in value to ten bushels of wheat. 
When inferior land is brought into cultivation, pro- 
ducing but nine bushels of wheat for the same labor 
that will give a return of ten bushels on the best land, 
one hundred yards of cloth will exchange for nine 
bushels, and the wages of all workmen per week will 
be nine bushels, this being the amount for which the 
produce of a week's labor (one hundred yards of cloth) 
will exchange. The cultivation of still poorer lands 
being required, on which the labor of one week will 
produce but eight or seven or a still less number of 
bushels, wages will decline to a like amount. 

The produce of industry and the rate of interest re- 
maining unaltered, a rise of wages would reduce the 
value of food, and raise in a like degree the value of 
other commodities. A rise of wages would, to use a term 



THE RELATION OF RENT TO WAGES. 107 

of Mill and his school, throw out of cultivation the 
poorer lands and raise the margin of cultivation, and 
in this way the value of food would fall and that of other 
commodities would rise. The effect, then, of a fall of 
both wages and interest, or a fall of either one, the other 
remaining unchanged, is to increase the value of food 
and other raw material, and to decrease the value of 
other commodities; in other words, to cause an approxi- 
mation of the value of food and other raw material to 
the value of those commodities produced by their con- 
sumption. If j5ve bushels of wheat and ten pounds 
of cotton are consumed in the production of one hun- 
dred yards of cloth, wages and. interest will depend on 
the value of wheat and cotton. While twenty yards of 
cloth will exchange for the above amount of wheat and 
cotton, eighty yards will remain to be distributed as 
wages and interest, but as the value of wheat and cotton 
increases so that first thirty, then forty or more, of the 
hundred yards of cloth must be given in exchange for 
them, the return for labor and capital is reduced by a 
like amount. It is, then, the margin between the value 
of what is consumed in production and what is pro- 
duced, on which wages and interest depend, and they 
increase as the margin is enlarged. In other words, the 
return for labor and capital depends on the approxi- 
mation of the value of food and raw material to that 
of finished commodities. As both wages and interest 



108 THE PREMISES OF POLITICAL ECONOMV. 

fall, or as one of them falls, the other being unaffected, 
the margin will be less and the approximation be 
greater, while the margin will be increased and the 
approximation decreased by a rise of either wages or 
interest, or of both of them. This is the effect of a 
change of wages on values, and a rise of wages not 
affecting all commodities in a like manner, all those 
propositions which affirm that the rate of profit depends 
on wages are incorrect, and Mill's attempts to save the 
propositions of the older economists, who elucidated 
the theory of distribution 'as if there were but two 
factors, — wages and profits, — are failures. He only 
succeeds in giving a false coloring to many economic 
truths, which, while confusing his own views and those 
of the reader, renders the true laws and relations of 
distribution clouded and invisible. 

If we are to obtain a correct statement of the laws 
of wages, it can only be done by placing rent in its 
proper place as one of the factors of distribution, in- 
vestigating not only the relations of wages and profits, 
but also of wages and rent. In other words, it must 
be determined what are the conditions according to 
which wages can rise at the expense of either profits 
or rent, or when to their benefit wages will fall. 

So long as the number of laborers is so small that 
all can be employed on lands of the best quality, the 
rate of wages depends upon profits, but when popula- 



THE RELATION OF RENT TO WAGES. 109 

tion increases^ so that the supply of food is no longer 
obtained at the lowest cost, from any limitation to the 
field of employment, rent arises. Now there being 
three factors in the distribution of produce, the possi- 
bility of raising wages no longer is limited to the ques- 
tionable possibility of reducing profits ; for wages under 
these circumstances can rise as well by a reduction of 
rent as of profits. 

I have in the previous chapters discussed the nature 
of rent and the eifect that a change of the demand 
for commodities has on rent, and the fallacies of the 
current view on this subject. I now wish to show the 
effect which a change in the demand for commodities 
has on the possibility of a rise of wages at the expense 
of rent. If, as the price of food becomes higher, poor 
lands are converted into good lands, and there is not, 
as is commonly asserted, an inexhaustible sujiply of 
poorer and poorer lands that can be brought into culti- 
vation as the price of food increases, then, as the com- 
munity progresses, the proportion of good lands to the 
poor lands increases, and the greater part of the pro- 
duce is obtained from good lands. 

Let us suppose two nations having an equal supply of 
food, in one of which one-half the food is produced on 
land that yields no rent, while on the other only one- 
tenth of the produce is furnished by such lands. It is 

plain that in these cases there would be a great differ- 

10 



110 THE PREMISES OF POLITICAL ECONOMY. 

ence in the power of the laborers to reduce rent by 
economizing food. It would doubtless be impossible 
in the first case for the laborers to accomplish anything. 
So great a reduction as one-half in the consumption of 
food, would doubtless be beyond their powers. If, 
however, only one- tenth of the food was produced on 
lands yielding no rent, this reduction could be easily 
accomplished, and their wages increased by the fall of 
rent. 

The ratio of good lands to the poor is, then, the all- 
important factor in determining the possibility of an 
increase of wages. If all the lands are good and yield 
rent, as they do in most old countries, then there is 
the possibility of a much higher rate of wages, if the 
laborers will consent to the proper method to obtain 
the increase. That as the price of food declines the 
supply decreases but little, is manifest from the results 
of American competition on English agriculture. No 
land has been thrown out of cultivation in England 
by the fall of prices, nor has the quantity of food pro- 
duced been reduced. The same fact was plainly shown 
by the small effect of the late hard times in reducing 
the food-supply, while the fact that the laborers did 
not suffer seriously for want of food shows that they 
can, if they really desire, reduce their consumption of 
food to such a degree as to produce a low price of food. 
As low a price can at any time again be obtained by a 



THE RELATION OF RENT TO WAGES. m 

reduction of their consumption, either through a bet- 
ter economy of what they eat or a reduction in the 
amount wasted in drink ; all alcoholic drinks being 
made from food-stuffs, and requiring much more land 
to be cultivated than would otherwise be necessary. 
If it requires a million acres to produce the food con- 
sumed in the manufacture of liquor, then if its con- 
sumption ceased either a million acres of poor land 
could be thrown out of cultivation, if there be poor 
lands in cultivation, or if not, these acres could be used 
to produce food. On either supposition there would be 
a marked reduction in the price of food. The same 
objection holds to the use of tobacco as to the use of 
liquor. The land used for this purpose either contracts 
the area used for the production of food, or requires the 
cultivation of a much poorer class of lands. In either 
case a rise of rent and a reduction of wages follow. 

Laborers are continually trying, usually with ill 
success, to increase their wages, but no endeavor is 
made to reduce the price of those articles which they 
wish to purchase with their wages, although here they 
have a field where they could produce great effects if 
they would use the same energy which they display in 
their contests with capital. If they succeed in ol)taiu- 
ing higher wages, it is questionable whether their real 
wages are increased. They always endeavor to obtain 
food and drink with their increased wages, and the 



112 THE PREMISES OF POLITICAL ECONOMY. 

rise in price of these articles so much reduces the value 
of their wages that little or none of the increase is left. 
This is clearly shown by the rise in the price of food 
accompanying the rise of wages at the end of the crisis 
of 1873. Every advance of wages was accompanied by 
a like advance of rent in its various forms, so that now 
the laborers are little or no better off than before. No 
better plan for the benefit of landlords could be devised 
than to have wages increased, since the laborers always 
adopt a course of action that only ends in transferring 
their wages to the landlords. 

It is remarkable that laborers do not stop their dis- 
cussion of wages long enough to consider what must be 
the inevitable result, whatever their wages may be, so 
long as they expend their money in the present manner. 
How much more food does each family obtain now 
than before the late rise of wages, and how much less 
house-room does each family now have than they had 
when a few years ago rents were one-half their present 
rate ? If these and other similar questions were asked 
and discussed, it would show how little the supply of 
food and houses is enlarged by the rise in the price of 
food and in the rent of houses. The increased price of 
these alters the distribution of wealth, but has little 
influence on its production in as far as it affects articles 
demanded by the laborers. The laborers are attempt- 
ing to do an impossible thing, since while the mass of 



THE RELATION OF RENT TO WAGES. II3 

the wealth produced is the result of their labor, they 
all want only the produce of the labor of but a small 
portion of their number. Two-thirds of them are 
employed in other pursuits than agriculture, and still 
most laborers refuse to consume anything else than 
agricultural produce. While this is the case they will 
get the result of only one-third of their labor, no matter 
what their nominal wages be. Their determination to 
get food and drink for all their wages will cause the 
value of food to rise, so that all their wages will pur- 
chase only the necessary food and what they drink. 

The laborers have also other resources besides this for 
raising wages at the expense of rent. They can change 
their consumption of food from articles which nature 
produces scantily to those produced more abundantly, 
or they can consume more of articles produced in 
climates of which the best lands are as yet not wholly 
occupied, and consume less freely of articles from places 
where the demand for their produce is so great as to 
cause much rent to be paid. This problem has already 
been discussed in the chapter on the social causes pro- 
ducing a high price for food, and hence a single ex- 
ample is needed to show its bearings on the rate of 
wages. 

A demand for whiskey or beer is a demand for a 

class of lands already in use and on which high rent is 

paid, and this rent will be further increased by the 
h 10* 



114 THE PREMISES OF POLITICAL ECONOMF. 

demand for whiskey or beer, since these drinks are 
made from the common cereals used for food. On the 
other hand, a demand for coifee is a demand for another 
class of lands of which but a small portion is in use. 
A change of demand from whiskey and beer to coifee 
would much reduce the rent of lands on which the 
common cereals are grown, while much more coffee 
could be produced without a material increase in price. 
Hence the whole gain in the reduction of rent on the 
grain-producing lands would come to the laborers as in- 
creased wages. The use of liquor, and other means by 
which the food-supply is wasted, is not merely a de- 
struction of capital, which only interests the consumers, 
their families and friends. If the demand for food 
when no liquor was drunk would cause the price of 
wheat to be one dollar per bushel, while the increased 
demand caused by the use of strong drink raise the 
price to one dollar and twenty-five cents, by compelling 
a resort to poorer lands, then all persons, even those 
who do not drink, lose twenty-five cents on every 
bushel they consume, since they are forced to pay that 
much more for their food than they would otherwise 
have to do. 

In saying that the demand should be changed from 
articles like wheat to those like corn, potatoes, or rice, 
of which much more can be produced on the same 
ground, I do not mean to infer that the use of wheat 



THE RELATION OF RENT TO WAGES. 115 

should cease. The demand for wheat is so great tiiat 
the supply cannot be obtained from the land for which 
it is best adapted ; and when land better fitted for other 
crops is sown to wheat, the price of wheat rises to such 
a point that the cultivation of poorer land is profitable. 
This, of course, causes all the better wheat lands to 
pay higher rent, while if a less amount of wheat were 
demanded, its price would fall and wages rise. Cli- 
matic conditions fix the number of good acres for whea:t, 
corn, rice, and all other articles, and when each acre 
is devoted to what it is best fitted, the price of all kinds 
of food is low and wages are high. Nature will not 
change to suit our notions ; we must conform to her 
laws. So long as the food of a people is composed of 
a few articles, like wheat and beef, wages must be low, 
since a demand for them alone causes such a waste of 
the productive forces of nature that but little is pro- 
duced, and from that little much is taken as rent. 

The tendencies of our present civilization having as 
an effect the concentration of all industry in a few 
places to which all others are tributary, the question 
necessarily arises whether this concentration has any 
effect upon the rate of wages. If we suppose, as is 
often the case, that on account of the close proximity 
of coal and iron some one point has a real advantage 
over every other place in a country for producing iron, 
and so much advantage that it is the interest of every 



116 THE PREMISES OF POLITICAL ECONOMY. 

other place that their iron be produced at this point, 
what would be the eflfect on the distribution of wealth 
as place after place were induced to obtain their iron 
here in exchange for their products ? A little consid- 
eration will make it plain that wages must fall. Those 
places that were nearest would have the greatest ad- 
vantage in the exchange, and while trade was carried 
on with them only, wages would be high, as at every 
point there is a like efficiency of labor, and of rent 
there would be none. When, however, more distant 
points began to trade in the place, wages must fall 
enough to equal the cost of transportation. The whole 
labor used to produce the iron and carry it to these 
more distant points and bring back their products 
would be less efficient than that employed in making 
exchanges with the nearer points. There cannot be 
two rates of wages in the same market, and hence the 
wages of all must sink to the lower rate. If a ton of 
iron would exchange on the home market for thirty 
bushels of wheat, and it cost five bushels of wheat to 
transport it to a more distant point and bring back 
wheat in exchange, as soon as this trade begins the ton 
of iron must exchange for twenty-five bushels of wheat 
at the home market. As still more distant points made 
their exchanges at this place, the price of iron must 
still further decline, and that of wheat go up, which is 
the same as a reduction of wages. If wages did not 



THE RELATION OF RENT TO WAGES. 117 

go down the exchange could not be made, and wages 
must continue to decline as long as more and more dis- 
tant points continue to be brought into commercial 
relations. 

• Tlie decline of wages is the condition on which such 
a trade can be carried on, no matter what be the ag- 
gregate gain to the nation at large. To illustrate 
more generally, let us suppose a city to be formed in a 
fertile plain, from which population extended out on 
all sides, the conditions of trade being such that it were 
advantageous to manufacture and trade in this one 
place, what was lost in cost of transportation being 
made up by more efficient production by mauufuctur- 
ing on a large scale. As production extended farther 
and farther from the city the cost of transportation 
would be greater at each extension of cultivation, and 
the price of food would rise and that of other commo- 
dities fall, and by so much would wages be reduced. 
While according to our supposition the gross produce 
is in proportion to the number of laborers employed, 
and as great as ever, still wages must decline, since 
some portions of that labor are less efficient than others, 
and with free competition no laborer can obtain more 
than those least 'productively occupied. 

The gains of any of the laborers from the advan- 
tages of production on a large scale and of foreign 
trade cannot be greater than those of the laborers who 



118 THE PREMISES OF POLITICAL ECONOMY. 

are least benefited, and this is the same as saying that 
they obtain no benefit, the most disadvantageously 
located having but nominal gains in the exchange. 

If the commerce and industry settles in two or more 
cities, the difference in the efficiency of labor is less, 
and wages will be higher than if all industry were con- 
gregated at one city. The larger the number of the 
cities and the better the distribution of the population, 
the greater will be the rate of wages, the difference in 
the efficiency of labor being less ; and the smaller this 
difference (the gross product of labor being the same) 
the greater will be the wages and the less will be the 
rent. The landlords as a class are interested in having 
the population congregated in as few places as possible ; 
the welfare of the laborers, on the other hand, is 
furthered by anything which causes a better distribu- 
tion of population and brings them nearer the pro- 
ducers of food. 

If the laborers ever advance far enough to investi- 
gate the causes which determine the prices of the arti- 
cles which they consume, they will see how much more 
powerful a lever for increasing real wages they have 
in combining to influence the price of food than in 
combining to increase money wages. The increase of 
money wages is at best but small, for it reduces the 
profit of capital. To economize the food-supply, to 
cause a better distribution of population, and to change 



THE RELATION OF RENT TO WAGES. 119 

the demand of food so as to reduce rent, not only raise 
wages but also profits, and enable capital so to in- 
crease as to employ more labor, not only increasing, 
therefore, the wages of labor but also the demand for 
labor. 

Production is limited by the field of employment, 
and every change by which food is saved and used, not 
for pleasure but only to preserve health, or by which 
the products of the whole world are more fully de- 
manded, increases the field of employment and enables 
more capital and labor to be employed and raises both 
wages and profits. 

There is one other point of importance in deter- 
mining wages to which it is necessary to refer, namely, 
the condition of the agricultural population. So long 
as they are in a miserable condition, and through defec- 
tive laws are deprived of the protection needed for the 
prosecution of their industry, the amount of produce 
will be small compared with what it should be. Thus 
the field of employment and production is limited, and 
wages fall both through the limit to production and 
through the influx to the cities of country labor seek- 
ing employment. It is not probable that the laborers 
of the cities if left to themselves would increase in 
numbers faster than the food -supply should, but when 
the country population is ignorant or deprived of their 
natural rights, the result cannot but be disastrous to the 



120 THE PREMISES OF POLITICAL ECONOMY. 

laborers of the cities, who not only must compete with 
the surplus country population, but must also, from the 
ignorance prevailing in the country, have their food- 
supply lessened. Laborers who wish high wages must 
be careful to do all in their power to place the lands of 
the country in the hands of those who will produce the 
most, to aid the spread of education among the country 
population, and to change the laws of the nation so that 
those who improve lands shall have proper protection. 
Only by these and like means can the increase of the 
food-supply be made rapid enough to supply the 
demands of an increasing population without an in- 
crease of rent. Every true reform must begin with 
measures relieving the agricultural classes of their 
burdens. A rise of wages cannot precede, but must 
follow the decline in the price of food. It is only when 
the laws sufficiently encourage the growth of intelli- 
gence among the agricultural classes that they can dis- 
place all the obstacles to the increase of food, and make 
all land that should be cultivated of so high a degree 
of fertility that the price of food would fall below the 
cost of production on the best lands now in use. Then 
rent will become a very subordinate element in the dis- 
tribution of wealth, and labor and abstinence will have 
their proper reward. 



CHAPTER V. 



FREE COMPETITION. 



The advantages of free exchange and competition 
are obvious, and have been often explained and ex- 
emplified by economists of all schools, but the disad- 
vantages have been entirely overlooked, or deemed so 
subordinate as not to be worthy of attention. Most 
economists boldly declare that a state of freedom, both 
in domestic and foreign exchange, is always beneficial 
to all parties, and that interference on the part of the 
state does incalculable injury. As to the benefit of 
free foreign trade, there is, of course, a wide difference 
of opinion, but the benefits of free competition in do- 
mestic trade are almost universally regarded as beyond 
dispute. Yet the subject of free competition really in- 
volves all those issues which are so earnestly discussed 
under the head of foreign exchange, and a solution of 
the difficulties of the latter problem cannot be obtained 
till the benefits and injuries of free competition in do- 
mestic exchange have been determined. If it be asked 
why free competition is beneficial, the ready answer is, 

it causes everything to be produced where it can be 
r 11 121 



122 THE PREMISES OF POLITICAL ECONOMY. 

made at the lowest rate, and wherever commodities are 
cheapest, the least labor has been employed in their 
production. Both protectionists and free-traders use 
the criterion of cheapness to determine the advantages 
of exchange. If a protectionist be asked why his sys- 
tem is superior, he will doubtless reply that it makes 
everything cheaper, and he will quote statistics to show 
how much iron, cotton, cloth, and other commodities 
have fallen in price since the introduction of a high 
tariff. 

This criterion of cheapness is clearly and tersely set 
forth by John Stuart Mill, while treating of the rela- 
tive merits of production on a large and small scale. 

" Wherever there are large and small establishments 
in the same business, that one of the two which in ex- 
isting circumstances carries on the production at great- 
est advantage will be able to undersell the other. The 
power of permanently underselling can only, generally 
speaking, be derived from increased effectiveness of 
labor ; and this, when obtained by a more extended 
division of employment, or by a classification tending 
to a better economy of skill, always implies a greater 
produce from the same labor, and not merely the same 
produce from less labor ; it increases not the surplus 
only, but the gross produce of industry." 

In this passage we have the issue plainly presented. 
Cheapness, the power of permanently underselling, is 



FREE COMPETITION. 123 

an unfailing test of the advantages of different systems 
of production. If an article is produced and sold 
cheaper by one system than by another, it indicates a 
more efficient use of labor, a better economy of skill, 
and, lastly, which is most important of all, a greater 
produce from the same labor. If increased efficiency 
of labor is the only cause of a reduction of prices, wages 
and profits can have no effect on the value of commodi- 
ties. Wages must go up as profits go down, and profits 
rise as wages fall ; each exactly counterbalancing the 
effect of the other, they produce no change in prices. 
Is this correct ? Are there no commodities that change 
in price when profits fluctuate? If a lowering of 
profits were always attended by an increase of the real 
reward of the laborers. Mill's view would be correct, 
but when the two fall conjointly because the price of 
food has risen through a limit to the field of produc- 
tion being reached, commodities do not exchange at the 
same values as before. A mere statement of the case 
shows that the price of food could not rise unless food 
exchanged for all other commodities in a new propor- 
tion. It does not follow that there has been no change 
in the value of commodities because there has been no 
change in profits. The real reward of the laborers may 
fall and the price of food rise without affecting profits, 
but any change in the relation of the two by which 
the rate of profits is not altered must have an effect 



124 THE PREMISES OF POLITICAL ECONOMY. 

on prices, and in so far as this should happen prices 
would be affected by something else than the efficiency 
of labor, and the power to undersell would depend not 
on this efficiency alone, as is claimed by Mill, but also 
on the wages of labor and the price of food. 

Prices are affected by those changes in wages caused 
by the competition of one class of laborers with an- 
other. Some classes of laborers have greater efficiency 
than others ; but if they require more wages than the 
others, it is a problem for the capitalist to determine 
which is more advantageous for him to employ. If the 
first class have double the efficiency, and demand less 
than double the wages, they are cheaper to him than 
the second class ; but if the first class demand more 
than double the wages, the second class will be more 
profitable to the capitalist. So long as there is work 
for both classes all can get employment, but as popula- 
tion increases and the limit of the field of industry is 
reached, all cannot get work, and then the question 
arises, which class will survive? Unquestionably it 
will be the class of laborers that cost their employers 
the least, for those capitalists who pay the least in pro- 
portion to the efficiency of their laborers can undersell 
their competitors. 

In every country there are many classes of laborers, 
who vary much in efficiency and in the amount of 
wages requisite for their needs and support. In his 



FREE COMPETITION. 125 

discussion of normal values, Prof. Cairnes, having 
clearly shown the existence of these various classes, 
seeks to determine the ratio at which the commodities 
of one class exchange with those of other classes. 
While the importance of this discussion is conceded, 
there is a m«ch more important question to which 
I wish to call attention, namely, what determines 
the relative numbers of the various classes. Prof. 
Cairnes calls them non-competing groups, but this is 
true only from one point of view. There is some 
reason why the lower classes of laborers cannot do the 
work of the higher, for if no obstacle stood in the 
way they would compete, and the wages of all classes 
be the same. The higher and more skilful classes, 
however, can do the work of the lower classes, can do 
it much more skilfully than the lower classes, and 
get a much greater return from the same labor. A 
mechanic, for instance, could plough, sow, and do other 
farm-work much better than the ordinary farm-hand. 
He has greater intelligence, and, with a little practice, 
would have greater efficiency in farm-work. So, too, 
those classes, having more skill and intelligence than 
the mechanic, can perform his work much better than 
he ; but he cannot compete with them in their work. 
The reason, then, why the higher classes cannot drive 
out the lower classes from all occupations is not be- 
cause they cannot do the work of the lower classes. 

11* 



126 THE PREMISES OF POLITICAL ECONOMY. 

They can do it, and much more efficiently than it is 
now done. It is because they would demand so much 
higher wages that the cost of labor would be greater 
than it now is. 

It is here in the competition of different classes of 
laborers that wages have an effect on prices. Any 
work that the lower classes can do is done by them, 
not because they are more efficient, but because they 
demand less wages in proportion to their efficiency 
than the higher classes. The capitalist employing the 
lower class of laborers under these conditions can sell 
cheaper than his rivals, and if one capitalist makes use 
of a low class of labor the others must do likewise, 
or be driven out of the market. As a country grows 
older and the field of employment becomes more fully 
occupied, the higher classes of laborers are driven from 
one employment after another, until, at last, they per- 
form only such labor as the lower classes cannot do. 
When there is a surplus of laborers, the desire to 
undersell causes the substitution as much as possible 
• of the lower classes for the higher and more skilful. 
In some cases the substitution is complete and all of 
the higher classes are driven out. Usually they do 
not all lose employment, only their relative numbers 
being diminished, and thus the cost of production is 
reduced. 

This suggests the reason why the introduction of 



FREE COMPETITION. 127 

machinery and production on a large scale is so profit- 
able. They require for their operation a much smaller 
number of the higher classes in proportion to the 
whole number of the laborers employed. When ma- 
chinery is introduced the work of the laborer is much 
more simple than before, and requires less skill. Like- 
wise when the scale of an industry is enlarged, there 
being a greater division of labor, much less skill and 
versatility are required of each laborer. In both cases 
a lower class of laborers can be employed, and the pro- 
ducts can be sold cheaper. The gross produce of in- 
dustry, however, is much less than it would be if none 
of tlie lower classes were employed, since a given 
quantity of food will not support a greater number of 
the lower classes than of the higher, while the efficiency 
of the higher classes, being much greater, will cause 
much more to be produced. 

The manufacture of pins is generally used to illus- 
trate the so-called advantage of a better economy of 
skill arising from the substitution of unskilled labor 
for the skilled. It is said that the wages now paid in 
England for making pins vary from four pence to four 
shillings a day, and if four shillings a day were paid 
to skilled laborers for doing all the work, the price of 
pins would be more than three times as high as it now 
is and there would be a serious waste, as labor is most 
efficient in production when each individual is em- 



128 THE PREMISES OF POLITICAL ECONOMY. 

ployed upon work best suited to his skill and physical 
strength. This argument would be good if there were 
no limit to the food-supply, if all laborers could be 
employed, and if there were no competition among 
laborers for places. "Whenever the field of employ- 
ment is fully occupied, every laborer of a higher class 
who is driven out of one occupation by the employ- 
ment of laborers of a lower class is excluded entirely 
from employment, or at least the relative number of 
his class employed is reduced, and the gross product of 
industry is diminished according as his efficiency sur- 
passes that of the laborer displacing him. Inventions 
and discoveries are constantly being made by which 
the average return for labor is increased, and every 
such improvement renders possible the employment of 
a greater proportion of dear but efficient labor. Yet 
the tendency is just the opposite. Less use is made 
of skilled labor when the employment of machinery 
and production on a large scale allow a greater division 
of labor, a continually smaller proportion of skilled 
labor being employed as the use of machinery becomes 
more extended and the scale of production is enlarged. 
The effect of a substitution of cheap for skilled labor 
must be detrimental when the average return of the 
industry in which skilled labor is economized is less 
than the average return for all labor. It is not proven 
that the wages of skilled labor in the manufacture of 



FREE COMPETITION. 129 

pins (four shillings a day) is greater than the average 
return for all English labor, and hence it cannot rightly 
be inferred that the more extended use of skilled labor 
in this case would be a serious waste, or that the gross 
produce of English industry would thereby be reduced. 

The power of underselling is not, as is claimed by 
Mill, due always to the greater efficiency of labor ; on 
the contrary, the power is usually obtained by the sub- 
stitution of cheap labor for that which is more efficient 
but dearer. The cheapness caused by the employment 
of low-priced labor is not universal ; a low price of 
the products of labor is produced, but a high one for 
food, the increase in the price of food going to the 
landlords as rent. When the price of food is so low 
that every laborer receives the whole produce of his 
labor, the laborers of the higher classes receive enough 
to supply themselves not only with food, but with 
other useful and necessary things. As soon as the 
competition of laborers caused by a surplus of labor 
begins, the question arises not who can produce the 
most, but who can spare the most to buy food with. 
The class which can do this survives, and the others 
either disappear, or only remain in places where cir- 
cumstances prevent competition from affecting their 
wages. 

The lower classes can almost always, if they are not 
prevented by some circumstances in the nature of the 



130 THE PREMISES OF POLITICAL ECONOMY. 

industry, or by some legal restraint, displace the higher, 
just as poor money drives out the good. There is no 
more reason to believe that capitalists will employ effi- 
cient labor, if its cost is high, than to believe that they 
will meet their own obligations with costly money when 
poor but cheap money would do as well. Cheap money 
will drive out the good, and cheap labor, the efficient, 
except in cases where cheap labor and cheap money are 
excluded by circumstances or law. 

If we further take into consideration the causes de- 
termining who shall cultivate the land, the case of cheap 
labor becomes still worse. As the question of survival 
in other occupations rests not on the ability to produce 
the most, but on the ability to pay the highest price for 
food, so in agriculture the que.stion is not who can pro- 
duce the greatest quantity of food, but who can pay the 
most rent. The public welfare demands that the great- 
est possible quantity of food be produced, but the land- 
lords are interested only in rent, which is the net 
produce, and they, not the public, decide who shall 
cultivate the lands. If we suppose two competing 
classes of laborers, one having ten per cent, less effi- 
ciency of labor and requiring eleven per cent, less 
wages than the other, this less efficient labor will dis- 
place the dearer. The gros^ industry of the country 
will be reduced ten per cent, provided the same number 
of laborers as formerly could be supplied with food. 



FREE COMPETITION. 13I 

But the same number cannot be supported, for the 
cheap labor now being used in agriculture will be ten 
per cent, less efficient than the dearer labor formerly- 
employed, and will therefore produce ten per cent, less 
food. Hence but ninety per cent, of the former popu- 
lation can be supported, and as each individual is ten 
per cent, less efficient, the production will be but eighty- 
one per cent, of the amount formerly produced, making 
a deduction of nineteen per cent, in the gross produce 
of the country in order to give the landlords one per 
cent, more than they formerly received. 

There is yet another cause for the displacement of 
skilled labor on a large scale in the change in the 
demand for commodities which the survival of a low 
class of laborers occasions. Cheap and poorly-made 
commodities can be made on a large scale of production 
more advantageously than can the dearer and better- 
made articles ; custom-made boots, ready-made clothing, 
cheap jewelry, and other like commodities which a low 
class of laborers desire, are the result of production on a 
large scale. Oa the other hand, the finer articles of ap- 
parel, costly ornaments, works of art, and most of the 
other commodities sought after by persons of means and 
refinement, are hand-made, and require a high class of 
laborers for their production. A low class of laborers 
will demand the produce of a low class of labor, and 
whenever they displace a high class of laborers from 



132 THE PREMISES OF POLITICAL ECONOMY. 

one occupation by accepting a lower rate of wages, they 
displace others of the high class of laborers by a 
change in their demand for commodities which require 
the cheap instead of the dearer and better made articles 
to be produced. 

At the same time a low class of laborers, through 
their exclusive demand for a few articles of food, reduce 
the food-supply. The amount of food that can be 
produced depends on what is desired, and when there 
is a demand for only a few articles of food, but a mere 
fraction can be produced of what could otherwise be 
obtained if the variety best suited to natural conditions 
were demanded. When, also, there is only a demand 
for a few articles of food, a much lower class of laborers 
can be employed in agriculture than would be the case 
if a greater variety were desired. It requires much 
greater skill on the part of the farmers to cultivate a 
great variety of crops than it does to raise a single crop, 
and where the work is simple, a low and ignorant class 
of laborers can survive. Thus one displacement of 
skilled workmen causes another, and wherever the 
cheap laborers once begin to drive out the skilled they 
soon get possession of most occupations, both through 
the change in the demand for commodities and through 
the increase in production on a large scale. 

In comparing two methods of production to deter- 
mine which of the two will have the greater gross pro- 



FREE COMPETITION. I33 

duction economists usually regard only the productive 
powers of the workmen, and overlook the effect of dif- 
ferent modes of consumption on the gross amount that 
will be produced. If A can produce more yards of 
cloth in a day than B, the inference is immediately 
drawn that if A displaces B the gross produce of the 
country will be increased. Yet this conclusion is likely 
to be erroneous, and certainly the reasoning is de- 
fective. The main element in determining the gross 
produce of any country is the use which is made of 
the land and the economy of the food-supply. Nature 
can produce some articles of food more abundantly 
tiian others, and some men take their pleasures in a way 
that will cause a greater consumption of food thaji do 
the habits of other men. A diiference of fifty per cent, 
in productive power would be an uncommon superi- 
ority of one class of laborers over another, while of 
many articles of food the land of a country produces a 
many-fold greater quantity than of other kinds of food, 
and the difference in the economy of food consumed by 
different persons is even greater than the difference in 
their productive power. 

Let us suppose that A produces fifty per cent, more 
of any manufactured commodity than B, and that B 
consumes those kinds of food of which the same land 
and labor can produce twice as much. Then twice the 

number of persons like B can be supported by a coun- 

12 



134 THE PREMISES OF POLITICAL ECONOMY. 

try, and with the same average income which persons 
like A would have, provided that in a nation of people 
like A half the people were engaged in agriculture. 
In a nation of A's one man produces enough food for 
two men, while in a nation of B's one man can pro- 
duce sufficient food for four persons, the land being 
twice as productive of the articles which men like B 
desire. As a result, three of the four men can be 
spared from agriculture for other work. A being fifty 
per cent, more productive in manufacturing than B, 
can, we will suppose, produce six yards of some com- 
modity in a day, while B can produce only four yards. 
A must give half of every six yards in exchange for 
foodj one-half the laborers in his society being agri- 
culturists, and has three yards remaining for his own 
use. B, however, gives but one-fourth of his four 
yards for food, only that portion of the workmen of 
his nation being agriculturists, and hence has also three 
yards remaining. The average income of each person 
in both societies will therefore be the same, — food and 
the equivalent of three yards of cloth for each day's 
work. Yet when men like A survive, the gross prod- 
uce will be but one-half of what it would have been 
if men like B had displaced those like A. 

This proves that the gross produce of any nation is 
mainly determined by the economy and the consump- 
tion of food, and not by the greater productivity in 



FREE COMPETITION. J 35 

manufacturing. At the same time the average income 
of a people consuming the articles of food more easily- 
produced, will be as great, if not greater, than that of 
the other nation, a much smaller proportion of the 
laborers being engaged in agriculture. The fact that 
those who consume the articles of food less easily pro- 
duced is admitted only as an illustration, since it ac- 
cords with the commonly-accepted doctrine that the 
cheapest producer is most productive. I contend, how- 
ever, that the opposite is true, those workmen being 
most productive in all industries who conform to the 
natural conditions by which they are surrounded. They 
will have developed in them a greater number of the 
qualities given to them by nature, and they are most 
efficient who have the greatest number of active" qual- 
ities developed, and not they who sell their produce at 
the cheapest rate. 

The evil results arising from a low rate of interest 
are possibly more detrimental to the increase of indus- 
try than those produced by a fall of wages. When the 
rate of interest has fallen so low that the greater por- 
tion of the people no longer have sufficient inducement 
to save, society being divided into two classes, capital- 
ists and laborers, the rate of interest is then mainly 
determined by two considerations, — the accumulation 
of wealth and the capitalist's place of residence. The 
richer the individual the easier it is for him to save. 



136 THE PREMISES OF POLITICAL ECONOMY. 

This point has been so often observed and illustrated 
that it only needs to be stated, but the other considera- 
tion, the place of residence of the capitalist, will require 
considerable illustration, as its effect on the rate of in- 
terest has been entirely overlooked by most economists. 
The rate of interest is not the only consideration 
which influences the capitalist to save; he is also 
largely influenced by the purchasing power of money. 
If money will purchase more at one time than at an- 
other, the rate of interest will be lower during the first 
period than during the second, for the same money will 
better supply the wants of the capitalist ; or, in other 
words, the same wants can be supplied with less money. 
Hence, when the increase of capital reduces interest, 
capitalists will save for a lower rate of interest than 
they would if the value of money was not so great. 
Just so the place of residence of the capitalist influences 
the rate of interest, money having different values in 
different places. A capitalist in a place where he can buy 
what he wants cheap has an advantage over those who, 
from their location, must pay more for what they de- 
sire. When the pressure from an increase of capital 
comes, those most advantageously situated will submit 
to the greatest fall in the rate of interest, the same in- 
terest haying more value to them than to others in un- 
favorable situations, who will, as a class, either cease 
to save or remove to more advantageous situations. 



FREE COMPETITION. 137 

For a capitalist a city offers more advantages than 
the country. In the country, it is true, food is cheaper 
than in the city, but this constitutes but a small share 
of the capitalist's expenditure, and in all other respects 
the city offers the better inducements. 

Another important consideration to the capitalist is 
the rate of wages. If wages are low, those articles of 
which his consumption mainly consists will be lower 
than where wages are high, as the greater part of what 
he consumes is manufactured commodities. These arti- 
cles fall in price as wages fall, and places where wages 
are low extend advantages to capitalists which other 
places where wages are high cannot offer. As a coun- 
try grows in wealth and the rate of interest falls, the 
advantages of the best place of residence will have ad- 
ditional weight with the capitalists. The country will 
be more and more drained of its capital by the gradual 
but constant movement of its capitalists to cities which 
offer better advantages to capitalists for enjoying their 
incomes, and from these sections of the country and 
cities where the rate of wages is high to those where 
the wages are low. 

It is almost needless to mention that the same influ- 
ences which induce capitalists to congregate in cities 
and in places where wages are low, operate with equal 
force on the landlords of a country. While the capi- 
talists and landlords derive their revenues from dif- 

12* 



138 THE PREMISES OF POLITICAL ECONOMY. 

ferent economic sources, still, as wealth accumulates 
aud interest falls, both the capital and land of a coun- 
try fall into the hands of the same class of persons ; 
that is, those who will save for the least consideration. 
These in the long run will be those who, from the 
advantages of situation and from the concentration of 
wealth in the hands of a few persons, can force the 
rate of interest to so low a point that to all others the 
inducement to save becomes insufficient. 

When it is asserted that the landlords will remove 
to large cities, those holding the legal title are not 
always meant, but often those who are the virtual 
owners, the holders of mortgages. Whenever land is 
mortgaged the real landlord is not the farmer who 
owns the land, for his share is usually not more, and 
is often much less, than the amount of capital em- 
ployed on the place in buildings and improvements. 
The real landlord is he who holds the mortgage, and 
he need not reside near the land, but may live wher- 
ever his desire or fancy dictates. 

The influence of these considerations on the capitalist 
class, and consequent gradual concentration of wealth 
in a few places and in the hands of fewer and fewer 
persons, may be observed everywhere, and nowhere 
plainer than in the United States. Every year sees the 
country lose more and more of its capital, and the land 
fall into the hands of persons who, even if they retain 



FREE COMPETITION. 139 

the nominal ownership, are not its real owners. Tliey 
are merely laborers, who have little or no hope of ever 
becoming the real owners, since the price of land is 
so high that the interest eats up all the profits of the 
farmer. One by one those farmers who are out of debt 
dispose of their farms and remove to the neighboring 
towns and cities, and their places are supplied by those 
who have no time for amusement and care little for 
churches or schools. Thus whole sections are gradually 
becoming stripped of their wealth, and are inhalpited 
only by families whose necessities compel unceasing 
labor for scant returns, and deprive them of the leisure 
necessary to the making of intelligent, thinking citi- 
zens, while those who really enjoy the produce of the 
land live often hundreds of miles away, and have no 
interest or concern in the prosperity of the places whence 
come their revenues. 

The causes which really underlie the misery of Ire- 
land, the absenteeism of its landlords, are at work in 
our own country, and will in time produce the same 
sad results; we then shall have on our hands not 
merely one Ireland, but a country full of Irelands, the 
tillers and occupants of the land sending away all they 
produce and receiving little or nothing in return. 

While capitalists are located everywhere throughout 
the country, there is good ground to believe that any 
local advantage for the investment of capital will be 



140 THE PREMISES OF POLITICAL ECONOMY. 

utilized. Industries will then be carried on mainly in 
the places where food is cheapest. Labor will natu- 
rally gravitate thither, food being the laborer's chief 
article of consumption. All this is changed by the 
localization of capital and its concentration in the 
hands of a few persons knowing or caring little for the 
advantages which other places than those now utilized 
may possess for carrying on trade or for manufacturing. 
So long, for instance, as Wales or Ireland has local 
capitalists eager to invest their money, there is good 
ground for assurance that the advantages of these 
countries will be developed, but after they are once 
drained of capitalists and landlords, the remnant lack- 
ing energy, and only with great difficulty meeting 
their obligations, the fact that certain industries are 
carried on at Sheffield and Manchester is not evidence 
that these cities have natural advantages not possessed 
by Ireland or Wales. 

After the land of a country is all in use, the only 
way to increase the produce of industry is by improv- 
ing the land and educating the laborers. Capital when 
held by a few persons wanting only safe investments, 
never adopts either of these modes of extending pro- 
duction. If land to any extent is to be improved, it 
must be done by those who live and labor upon it, and 
from their own earnings ; and if the laborers are to get 
any education they must pay for it themselves, unless, 



FREE COMPETITION. 141 

perchance, the government provides it. For these rea- 
sons laborers on land are usually ignorant and ineffi- 
cient, the land is but partially improved, and produc- 
tion is checked by an artificial limitation to the field of 
employment, brought about by the rate of interest 
sinking so low that only a few persons most advanta- 
geously situated have sufficient inducement to save. 

In such a social state the laborers will be congregated 
in large numbers in the few places most attractive to 
the capitalists. Wherever the capitalists go the laborers 
must follow. Most of the food will be sent to the 
capitalists owning land for rent, and the workmen 
must leave their old homes and seek the food. Just 
as a swarm of bees must follow the queen bee, moving 
when she moves, and stojDping when she stops, so must 
the mass of the people not saving for themselves follow 
after the few who possess capital, and congregate in 
swarms where the capitalists reside. 

Those who have not all the qualities necessary for 
production are dependent on those who have all that is 
required, and the greater the dependence of any class 
the less will their interests influence production. If 
we had a telescope large enough to discover the' size 
and number of the cities in distant planets, we could 
determine the prevailing rate of interest. The larger 
the cities, and the fewer their number, the greater the 
accumulation of wealth and the lower is the rate of 



142 I'SE PREMISES OF POLITICAL ECONOMY. 

interest. Whenever a nation favors a low rate of in- 
terest and the accumulation of wealth in the hands of 
a few persons, a great deterioration of the laboring 
classes is sure to follow. On one hand, they lose the 
inducement to save, and the qualities which a high 
rate of interest tend to develop. On the other hand, 
by being crowded together in large cities, they lose 
many means of enjoyment which were free to them 
when scattered throughout the country. Pure air, the 
beauties of nature, and the many innocent rural sports 
are lost, and all the remaining pleasures are those ex- 
clusive ones derived from the consumption of liquor, 
tobacco, and other rude enjoyments attractive only to 
persons deprived of other pleasures. 

As has been shown in a former chapter, the value of 
agricultural and mineral products is liable to sudden 
changes, since a slight increase in the demand for these 
articles must cause so great a rise in their price before 
the supply can be increased from new land and mines 
with great obstacles to their use, while a slight decrease 
in the demand will cause a very low price, there being 
no land or mines in use having a great cost of produc- 
tion, which will go out of use as soon as the price of 
these products begins to fall. The suddenness and 
extent of fluctuation in value of all commodities are 
greatly increased as soon as production on a large scale, 
combined with a low rate of interest, causes the laborers 



FREE COMPETITION. 143 

who would save to be displaced by those having no 
desire to save for themselves. When the price of any 
article falls those who have capital lay up a stock of 
the commodity, and thus the fall in value is checked 
by the increase in the demand. Those who do not 
save must reduce their purchases when prices fall. 
The decline of prices reduces the amount of work to 
be performed, and when no work can be obtained their 
consumption of commodities must be reduced to a 
minimum. When the mass of the laborers have no 
capital, the decline in price of the produce of a few 
industries causes a decline in the demand for all com- 
modities through the reduced consumption of those 
without work. All industries are affected, and through 
the accumulated effect of the reduced demand for labor 
in the various trades there is a sudden and a great 
decline in the value of all commodities. On the other 
hand, as soon as altered industrial circumstances offer 
work to the laborers there is a sudden and rapid rise 
of values, caused by the urgent needs of those laborers 
who for a time have been compelled to do without many 
of the necessaries of life. Production on a large scale, 
and free-trade likewise, tends to increase the fluctuation 
in values, since they cause the industries of the whole 
world to be carried on in a few places, which are so in- 
timately connected with one another that whatever af- 
fects one centre of trade reacts upon all other commer- 



144 THE PREMISES OF POLITICAL ECONOMY. 

cial centres. So long as each nation was commercially 
independent, a decline in values in one country caused 
an increased export of commodities to other lands where 
prices were unchanged. When, however, all nations 
are intimately joined in commercial relations, no relief 
from a fall of values can be obtained by exportation 
of goods, since all parts of the commercial world being 
affected by similar circumstances suffer at the same time 
from a decline of values. 

These causes of the fluctuation of values also affect 
the value of gold and silver, destroying that perma- 
nency of value which renders them so superior to other 
kinds of money as a medium of exchange. All 
writers who have advocated correct doctrines concern- 
ing money lay great stress on the fact that a decline in 
the value of the precious metals in one nation will 
cause them to be exported to other nations where their 
value is higher. This argument for the superiority of 
metallic money is of no importance where all nations 
are joined in such intimate commercial relation that 
they really form but one nation. Under these condi- 
tions the rise and decline of the value of the precious 
metals will happen at the same time all over the world. 
The same amount of money is not needed at all times, 
there being a greater amount of trade and commerce 
some years than others, yet the amount of money will 
be the same at all times, when the fact that all nations 



FREE COMPETITION. I45 

enjoy prosperity and suffer ill fortune together prevents 
such an exporting of the precious metals from one 
nation to another as would give them a greater stability 
of value. 

In yet another way does the increase of cheap labor 
increase the fluctuation of the value of money. In 
former times, before independent workmen were dis- 
placed by production on a large scale, almost every 
workman possessed a hoard of money, which he en- 
larged when the value of money fell, and put into 
circulation when the value rose. A multitude of such 
hoards acted as a reservoir, preventing great changes in 
the value of money. By the displacement of producers 
on a small scale this reservoir has been lost. The 
laborer of to-day instead of possessing a hoard of 
money laid away for hard times, usually, by means of 
the credit system, spends his wages before they are 
earned. Wherever a low rate of interest induces busi- 
ness men as well as workmen to make an extensive use 
of their credit and economize the use of capital as 
much as possible by means of production on a large 
scale, all commodities, including money, will be subject 
to sudden changes in value. The extent of fluctuations 
of values has gradually increased as more extended use 
has been made of low interest and cheap labor, and 
when this combination has displaced all independent 

producers who save for themselves, these fluctuations' 
0, k 13 



146 THE PREMISES OF POLITICAL ECONOMY. 

of value will be so great as to render all prodactioa a 
lottery, and prevent every one from saving except those 
who have capital enough to control some industry. 

The effect of low wages and low interest is an ap- 
proximation of the price of raw material to that of 
manufactured commodities. As has been shown in the 
previous chapter, the reward of labor and abstinence 
is dependent upon the difference between the price of 
food and other raw materials and that of the finished 
commodities. The value of agricultural produce is low 
as compared with finished commodities when only those 
lands having great original fertility are tilled. As 
soon, however, as the supply of these lands is exhausted 
and others must be cultivated requiring the expenditure 
of capital to fit them for tillage, the approximation of 
prices begins. There is a class of capitalists who prefer 
safe investments and a low rate of interest, and a class 
of laborers who accept low wages rather than make the 
sacrifice necessary to become skilled and efficient or to 
save capital. To neither of these classes does the 
preparation of new lands for tillage offer any attraction, 
since such enterprises are not safe investments to capi- 
talists, nor sought after by indolent, inefficient work- 
men. These two clashes combining bid for the field 
of employment open to them, and there is only one 
method open for their success. In exchange for food 
and raw material they must offer a greater quantity of 



FREE COMPETITION. I47 

what they produce than can be clone by the other class 
who are skilled and save for themselves. If ten yards 
of cloth is offered by the more efficient class for a 
bushel of wheat, this combination of low interest and 
cheap labor will give eleven, or a greater number of 
yards, and thus drive out their superiors by the ap- 
proximation of the prices of raw material to manufac- 
tured articles which isdn this manner brought about. 
There are no means by which any class of laborers or 
capitalists can escape the result of this approximation 
of prices. If one class of producers are willing to ex- 
change twenty yards of calico for a bushel of wheat, 
all producers offering less for wheat lose their trade, 
while those offering twenty yards will be displaced as 
soon as a combination of cheaper labor and lower 
interest can give twenty-two yards for a bushel. In 
this way the approximation of prices becomes greater 
as a nation grows older, and as a result the intelligent 
classes are gradually displaced, and rent absorbs a large 
part of what is produced on the limited field of em- 
ployment open to the surviving combination. 

It is usually claimed that the competition of laborers 
benefits the capitalists, and that the competition of 
capitalists benefits laborers ; but this we now see is not 
correct. So soon as a limit to the field of employment 
is reached the result of all competition, both of laborers 
and capitalists, is lower interest and lower wages, while 



148 THE PREMISES OF POLITICAL ECONOMY. 

rent is raised by the consequent approximation of the 
price of raw material to that of manufactured com- 
modities. 

It is objected, however, that laborers regain their 
loss from low wages in the lower prices at which they 
obtain what they consume of others' labor. So far 
as they are consumers of the commodities produced 
by other laborers, they lose and gain nothing, while 
all laborers lose by the increased value of food and 
raw material. Suppose three yards of silk, six yards 
of linen, or fifteen yards of calico could be exchanged 
'for a bushel of wheat before the fall of interest and 
wages, and that afterwards four yards of silk, eight 
yards of linen, and twenty yards of calico were re- 
quired to procure a bushel of wheat. If this were the 
case, the owners of wheat would make a gain of one- 
third in all their exchange for silk, linen, and calico, 
and the producers of these articles, while losing in all 
their exchanges for wheat, would be in the same posi- 
tion as formerly in regard to the exchange of the 
produce of one laborer for that of another laborer; 
that is, the ratio of exchange of silk for linen or calico, 
or calico for linen and silk, would be the same as be- 
fore, a yard of silk still exchanging for two of linen 
and five of calico. 

The increase of the value of wheat would not be the 
only gain of the landlords, for the same labor and cap- 



FREE COMPETITION. I49 

ital as before would be willing to engage in production 
for one-third less return than formerly, so that agricul- 
tural capital and labor would be compelled to drop 
one-third of their remuneration. Thus the landlords 
would not only get one-third more for their wheat, but 
the wheat would be produced for them at one-third 
less cost than formerly. 

Since the power of underselling does not necessarily 
arise from an increased efficiency of labor, and since 
between rival producers the question of surviving is 
determined not by the amount of gross produce, but 
by the amount of the surplus above interest and wages 
which can be given for rent, it is evident that produc- 
tion on a large scale is not adopted as the most economic 
metiiod, but because it effects the largest utilization of 
cheap labor and low interest. It is essential to the suc- 
cess of production on a small scale, and of co-operation 
as well, that interest be high enough to induce every 
one to save, and that all the laborers be skilful and in- 
telligent. But they cannot develop skill and intelli- 
gence if the reward for their labor is squeezed down 
to its lowest possible limits by the employment of cheap 
labor and low interest in production on a large scale. 
Let us suppose that three dollars a day is just sufficient 
to induce laborers to become skilled and save capital 
enough to furnish them with self-employment, and 

that by production on a large scale one-fourth less was 

13* 



150 i's:e premises of political economy. 

produced, and at one-third less cost. In this case, 
although for every three hundred dollars' worth of 
goods formerly produced, only two hundred and 
twenty-five dollars' worth is now produced ; yet as 
wages and interest have fallen one-third, what was for- 
merly sold for three hundred dollars can now be ob- 
tained for two hundred and seventy-five dollars, or one- 
twelfth less than formerly. Skilled laborers must now 
work and save for two dollars and seventy-five cents a 
day, and since this is not enough to induce laborers to 
become skilled and save for themselves, they will be 
displaced by the producers on a large scale, and the 
gross produce of the country will be one-fourth less 
than before the displacement took place. 

Of course the term production on a large scale must 
be used in a relative sense. What at one time would 
be regarded as a very large scale of production would 
at another time seem extremely small. The main point 
to be kept in view is, the advantages of cheap labor and 
low interest are so great that the scale of production is 
greatly extended in those oases where it is really bene- 
ficial, and in many cases where small combinations 
of laborers are most efficient, they are displaced by the 
use of cheap labor and low interest solely on account 
of the power of underselling which this combination 
possesses. For this reason the scale of production now 
employed is not a fit criterion for determining what 



FREE COMPETITION. 151 

method of production is most advantageous. Nor will 
a comparison of present methods with those formerly 
in use be any more decisive. The restoration of any 
former class of laborers is not what is desired, but the 
preservation and enlargement of that class thinking 
and saving for themselves who are now reduced to so 
small a number by the false economy of skill and in- 
telligence. 



CHAPTER YI. 

THE LAW OF DIMINISHING EETHRNS. 

All, writers, in discussing the law of dimiDishing 
productiveness of the soil, have accepted, without dis- 
pute, the assumption that the return for labor from a 
given tract of land could be continually increased by 
the use of more labor, the point controverted having 
been whether or not the additional labor obtained a 
greater or a less proportional return than the previous 
labor. Both parties seem to have overlooked the 
third alternative, that the proportional return might 
increase up to a point beyond which no additional 
return could be obtained by any amount of labor. If 
this were true, we would have a law of limited returns 
as contrasted with a law of diminishing returns. Then, 
instead of a law asserting that a greater number of 
people cannot be as well provided for as a smaller, we 
should have the following : up to a given figure the 
greater number of people can be better provided for 
than the smaller, but a number of people exceeding 
that figure cannot be provided for at all. Against 
such a position the arguments used by the advocates 

of the law of diminishing returns would not be valid. 
152 



THE LAW OF DIMINISHING RETURNS. I53 

They argue that if the law of diminishing returns were 
not true, only the best soils would be cultivated. Poor 
soils are cultivated, and this would not be the case if 
the law of diminishing returns were not operative. 

The cultivation of poorer soils and the high price 
of food are accounted for by the law of limited as well 
as by that of diminishing returns. If in the case of 
wheat the returns increased proportionally until sixty 
bushels to the acre were harvested, and none beyond 
this could be obtained by any amount of labor, addi- 
tional acres would have to be cultivatefl as the demand 
for wheat increased; and when all the good land had 
been brought into use, inferior lands would have to be 
resorted to, and the price of wheat would rise owing to 
the increased cost of cultivation. 

The fact that inferior lands are cultivated shows 
that the superior lands cannot supply the market, and 
that there is a limit to the productivity of land, but 
what that limit is this fact alone does not decide. If, 
up to this limit, land gives increased returns to the 
labor employed, and will yield nothing further with- 
out increased knowledge or improvements, then new 
and inferior lands would be cultivated as the demand 
for food increased just the same as if the law of 
diminishing returns were true. The only difference 
would be that some of the additional supply would be 
obtained from the old lands by the use of additional 



154 THE PREMISES OF POLITICAL ECONOMY. 

labor, if the law of diminishing returns were true; 
while, on the other supposition, all the increased supply 
would come from the new lands, unless the increased 
price would cause additional capital to be used or in- 
duce the farmers to use more skill and better methods. 
So far at least as man subsists on animals the law 
is of limited and not of diminishing returns. The 
American Indians who lived on buffaloes did not suffer 
from a limited increase of their numbers, since they 
could hunt more successfully in large than in small 
numbers. When many hunted, so long as they only 
killed the increase of tlie buffaloes, they obtained a 
greater proportional return for their labor than when 
only a few engaged in the chase. When, however, they 
killed more than the increase of the buffaloes, their 
game became scarce, and they had to hunt longer than 
before and get less game. To Indians, then, as to all 
races who subsist on wild game, the law must be that of 
limited returns, an increase of population being beneficial 
so long as they do not reduce the number of animals on 
which they subsist ; and they cannot increase their num- 
bers at all beyond the number which consumes the in- 
crease of the animals constituting their food. The same 
law applies to fisheries ; if more than the increase of fish 
be consumed, the labor of catching them is increased 
while the number caught is diminished. Still more is 
the law of limited returns true of people who live by 



THE LAW OF DIMINISHING RETURNS. 155 

herding domestic animals, such as cattle and sheep, 
since their labor decreases as the number of cattle or 
sheep increases, and as long as there is pasturage, an 
increase of population is beneficial ; but when grass 
gives out the population cannot increase at all. So far 
then as population is supported by animal life alone 
the law of diminishing returns does not hold. If the 
law applies to anything it must be to the increase of 
vegetable life. When man resorts to agriculture for 
food, or to increase the food of the animals on which 
he subsists, the laws of the increase of food seem to be 
different from those by which it was governed when he 
lived on animal food alone. A correct analysis, how- 
ever, of the causes by which vegetable life is increased 
will reveal the same law as that of limited returns. 

If an ultimate limit to the increase of vegetable life 
on a given area can be shown, the truth of the law of 
limited returns will be made clear, provided it can also 
be shown that this limit can be reached without a de- 
creasing proportional return to the labor employed. 
Such a limit to the increase of the food-supply may be 
found in the space needed by each plant for its proper 
growth and development. On any field only a certain 
number of plants of any kind can thrive, and if more 
are allowed to grow, the return will be diminished in- 
stead of increased. If a farmer should sow eight 
bushels of qats or wheat to the acre, his return would 



156 THE PREMISES OF POLITICAL ECONOMY. 

not be so great as if he sowed only three or four bushels, 
the plants needing room, air, and sun to mature prop- 
erly. The limit varies with different plants. If we 
sow a field to wheat and then to rye, we may increase 
the return by the change of plants, but every plant has 
its limit, and hence there must be a limit to the supply 
of vegetable food. 

Inasmuch as the extreme limit to which production 
can be forced is that of space or room for the plants, 
the question whether the law of the return is that of 
limited or diminishing returns must depend upon what 
are the elements which contribute to the increase of 
vegetable life. If labor is the t>nly or the chief ele- 
ment, then the law of diminishing returns might be 
true. If labor is subordinate to other elements of a 
very different nature, then we must expect to find that 
the law is that of limited returns. 

The relation of the law of limited returns to knowl- 
edge and capital may be clearly stated in the following 
way. There is a greatest possible return from a given 
area; this return is seldom obtained, for it requires a 
conjunction of natural causes which rarely occurs. Some 
years it is too cold, other years it is too hot, some years 
it is too dry, others it is too wet, some soils are deficient 
in one respect and others fail in an opposite direction. 
All of these and many other diversities have to be 
taken into account, and on the proper appreciation of 



THE LAW OF DIMINISHING RETURNS'. 157 

them all the result depends. More labor cannot do 
much, and if but little skill and capital are used, the 
crop will usually be small. Sometimes, however, all 
the elements of nature are favorable, and then just as 
good a crop is obtained by the poor farmer as by the 
good. A Texas squatter can sometimes obtain seventy 
bushels of wheat to the acre without much labor, 
merely from a conjunction of favorable circumstances. 
This is perhaps the extreme limit to the growth of 
wheat, and scientific farming lias for a goal the attain- 
ment of this return on all lands every year ; in other 
words, science would make all lands good lands. 

The use of capital implies the use of more labor for 
a time while the obstacles to cultivation are beius: re- 
moved. When they are once overcome then the addi- 
tional labor is no longer needed. This land can now 
be cultivated with as small an annual use of labor as 
can the land free from obstructions. The fact that a 
small amount of labor obtains the largest possible yield 
of food when the land is without obstructions to culti- 
vation, and there is a conjunction of favorable circum- 
stances, shows that the annual cost of cultivating all the 
land that should be cultivated is small. Since on some 
fields there is always a small cost of production, and 
on other fields the cost is often small, there is good 
ground for the belief that skill and capital can cause 

all improvable lands to give their best yield with no 

14 



158 THE PREMISES OF POLITICAL ECONOMY. 

more labor than is now necessary on the best lands in 
use. 

Every increase of capital and skill reduces the quan- 
tity of labor necessary to obtain from land the present 
produce, and if they displace more labor than the addi- 
tional labor which can be employed at a diminishing 
return, the return as a whole will be greater in propor- 
tion to the labor expended. If three men are displaced 
by skill and capital to every two additional men that 
can be employed, the whole number of laborers will 
decrease, while the produce increases. Unless the in- 
crease of labor used in agriculture was very small in 
proportion to the increase of capital and knowledge, the 
prc^ortion of laborers engaged in agriculture to those 
otherwise employed could not have constantly decreased 
as it has done throughout modern times. 

That the labor element in agriculture is nearly con- 
stant, not increasing much, if at all, when a better 
system is introduced, can be clearly seen when we con- 
sider what the function of labor is in the production 
of food. All that labor can do,. to which the law of 
diminishing returns can be said to apply, is in the pre- 
paring of the soil. In very early stages of agricul- 
tural knowledge what labor alone could do could be as 
well done as now. A man with a spade and rake can 
prepare the land as well as any machine can do it. 
When machines are used, it is not because they do the 



THE LAW OF DIMINISHING RETURNS. I59 

work better than it can be done by manual labor, but 
because labor is spared. Improved processes of pre- 
paring the soil have simply found substitutes for man- 
ual labor. More labor had to be expended where fal- 
low ploughing was customary than when this became 
unnecessary through use of a proper rotation of crops. 
The ground had to be ploughed whether a crop was 
raised or not, and the rotation of crops made the 
ground more porous and pliable. Thus less labor 
would prepare it as well as before, and, besides, a crop 
was obtained every year. 

Where land is used part of the time for grazing and 
meadow, the reduction of labor from what was needed 
under the old system of agriculture is very marked. 
Such land need not be cultivated more than half of 
the time, and though half the labor is dispensed with, 
yet a much greater return is obtained. The rotation 
of crops also requires fewer laborers, as the work is 
scattered throughout the year and steady employment 
is given ; the different crops being cultivated and 
gathered at different times, while in winter employ- 
ment is given in the care of the live-stock, whereas 
under the old system, the return of a few days' labor 
had to support the laborer the entire year. So also 
the use of harvesting machinery causes harvesting to 
be done throughout the year instead of during a tew 
days as formerly was the case, thus dispensing with 



160 THE PREMISES OF POLITICAL ECONOMY. 

labor by giving steady work in the machine-shops. If 
no other result were obtained from improved processes 
than this better utihzing of labor, this result would 
more than counteract any tendency there may be to- 
wards diminishing the return from agriculture. 

The most important conclusion from the foregoing 
facts yet remains to be noticed. It is not enough that 
there is a rotation of crops, there must be a different 
rotation for each variety of soil if the greatest return 
for labor is to be obtained. One soil is unfitted for 
wheat, another for corn, and a third for sugar-cane and 
rice, the fourth for coffee or tea. Besides this, some 
soils will bear a crop of wheat, or of some other arti- 
cle for which it is fitted, more frequently than will 
other soils. Hence there must be a difference not only 
in the crops for each soil, but also a difference in the 
frequency in which each crop of the rotation can be 
harvested with profit. For instance, some soils will 
bear a crop of wheat once in three years, while on 
other soils once in five or six years is as often as a crop 
of wheat should be raised. A rotation should be made 
of those crops which are adapted to each variety of 
soil, producing each crop as frequently as the nature of 
the soil will allow. Unless there is a demand for all 
the different kinds of produce, and for that amount of 
each article of food corresponding to the quantity of 
land best fitted for its use, the best rotation of crops 



THE LAW OF DIMINISHING RETURNS. 161 

cannot be utilized, and resort must be had to some 
other rotation less adapted to the nature of the soil on 
which the crops are raised. Suppose that on a given 
tract of land the best rotation of crops would produce 
one million bushels of wheat, two million bushels each 
of rye and oats, three million bushels of potatoes, and 
five million tons of grass and hay, and that the demand 
for food required three million bushels of wheat, one 
million bushels each of rye, oats, and potatoes, and three 
million tons of grass and hay. In this case the land 
must be sown to wheat more frequently than is con- 
sistent with the greatest productivity of the soil. By 
this change in the crops not only will the gross return 
from the land be reduced, but also there must be addi- 
tional labor employed to produce this diminished re- 
turn. The land will not be mellow and porous, and 
more manure and cultivation will be required than if 
the best rotation of crops for the land had been fol- 
lowed. Wherever the demand for food is such that 
soils unfitted for a crop are used for its production, or 
that a crop is raised on land more frequently than it 
should be used for this crop, there will be a reduction 
both of the gross and average return for labor on the 
laud. This is the reason why lands in old countries 
require so much labor for their cultivation. The de- 
maud for food is limited to a very few articles, such as 

wheat or rye, potatoes, and beef, while of the other 
I 14* 



162 THE PREMISES OF POLITICAL ECONOMY. 

articles so little is desired that they cannot be produced 
with that frequency which is needed for the best use 
of the land. In most countries the demand for wheat 
is so great, and its price so high, that it is profitable to 
force its cultiv^ation into the rotation of crops as often 
as possible. This can only be done by the use of much 
more labor than would be required for the cultivation 
of other crops for which the land is better fitted. 
Wheat is not the crop that is forced into the rotation 
with too great frequency in every country. In some 
districts it is sugar-cane, or the sugar-beet, in others it 
is cofiee, rice, or some other crop which is in great de- 
mand. The effect, however, is the same in all these 
cases. Additional labor must be employed to overcome 
the reduced natural fertility of the soil which an un- 
fitted rotation of crops necessitates. Just as the en- 
deavor to raise coffee in Illinois, or oranges in Scot- 
land, would cause a needless expenditure of labor, so a 
too frequent cultivation of wheat, or of some other article 
of food on any soil, causes a much greater outlay of 
labor than would be necessary if other crops were used 
for food to a greater extent. Suppose the demand for 
coffee and oranges was so great that the lands best fitted 
for their production could not supply the demand, and 
their price rose so high that their cultivation in Illinois 
and Scotland became profitable, could any one rightly 
affirm that this increase of labor proved the law of 



THE LAW OF DIMINISHING RETURNS. 163 

dimiuishiug returns? If they could not, then a too 
great use of wheat, tobacco, or of any other article, 
does not prove the truth of this law. There is a great 
difference between the assertion that an increased de- 
mand for one or some few articles of food causes a re- 
duced average return for labor, and the claim that the 
average return is diminished by an increased demand 
for all articles of food in that ratio for each article 
which will cause each tract of land to be put to the 
best use. The first assertion is doubtless true. It is 
plain that no one crop, whether wheat, rice, tobacco, or 
oranges, can be raised in all countries and on all soils 
without a great increase of the cost of production. To 
prove the second assertion will be a difficult task, unless 
the laws of nature are much different from what they 
are now supposed to be. All the facts at present known 
show that both the average and the gross return grad- 
ually increases when the land is used for what it is best 
fitted, and that the return is only reduced when crops 
for which the land is not suited must be cultivated, on 
account of a demand for so few articles of food that a 
proper rotation of crops is unprofitable. 

The cost of transportation is always paid out of the 
increased return from production on a large scale, and 
hence does not reduce the average return for labor. 
Where people are intelligent, production on a large 
scale will never displace local industries, unless the 



164 THE PREMISES OF POLITICAL ECONOMY. 

average return for labor is enlarged. This increased 
return arises from the combined exertion of all the 
laborers. To assert that this or that portion of the 
labor is less productive than some other is like main- 
taining that the labor of ploughing or harrowing is 
less productive than that of reaping and threshing. 
Land must be ploughed and harrowed, and the crop 
reaped and threshed, in order to secure a crop. It is 
improper, therefore, to affirm that one portion of the 
labor necessary to obtain the crop is less profitable 
than some other. For the same reason it is evident 
that the labor on the lands more distant from market 
increases the gross returns of industry just as much as 
those more favorably situated. So large a scale of 
production could not be carried on without the pro- 
duce of the remote lands. If this produce were not 
brought to the centre of trade, the returns for all labor 
would be reduced more than enough to pay for the 
cost of transportation. Suppose ten million bushels 
of wheat, or its equivalent in other food, wera needed 
at one place to produce other desired commodities on a 
large scale. This amount of wheat will not be brought 
to this place unless the gain from a large scale of 
production will more than counterbalance the loss 
through an increased cost of transportation caused by 
bringing more food to one place. Under these con- 
ditions the efficiency of labor is greatest when ten 



THE LAW OF DIMINISHING RETURNS. 1G5 

million bushels of wheat are brought to one place and 
the nation divided into districts each producing ten 
million bushels. 

If the ten million bushels could be obtained nearer 
home without an increase of expense, certainly the 
average return for labor would be diminished by going 
so far for the food. The unused lands nearer home 
have enough greater cost of cultivation to counter- 
balance the greater cost of transportation required to 
obtain the food from a distance, and thus no gain can 
be derived by greater cultivation of the lands nearer 
home. The only other alternative is a decrease of the 
scale of production. If the district producing ten 
million bushels be divided into ten districts producing 
one million bushels, the cost of transportation will be 
reduced, but the scale of production must also be 
smaller. The loss in this way will be greater than 
the gain from the reduced cost of transportation, and, 
as a result, the average return will be no greater than 
before. 

Suppose for a given city that the food having the 
greatest cost of transportation is obtained from a dis-« 
trict at the cost of five cents a bushel, and that within 
the district production on a scale small enough to con- 
sume only the produce of the district could offer the 
producers of food ninety cents a bushel. In this case 
ninety-five cents a bushel must be paid for all food at 



166 THE PREMISES OF POLITICAL ECONOMY. 

the city, and this could not be done unless the larger 
scale of production possible in the city was productive 
enough to enable laborers to pay five cents more for food 
than could be paid by consumers in the most distant dis- 
trict. Unless aided by a low rate of wages and interest 
reducing both the gross and average return for labor, 
a large scale of production can displace a smaller one 
only when the increased productiveness is equal to the 
greatest cost of transportation. In any district, if the 
return for labor is reduced, resort will be had to the 
smaller scale of production. If the most distant dis- 
trict has the same average return as before, the nearer 
districts will have a greater average return. They 
have a smaller cost of transportation, and hence the 
average return for all labor is increased by the change 
in the scale of production and the increase in the cost 
of transportation. Free competition will not distribute 
this return equally to all persons, since there will be an 
increase of rent. This does not alter the fact that each 
laborer was necessary for so large a scale of production, 
and that the average return for all labor would be 
reduced, if any portion of the work remained unper- 
formed, or any workmen employed on any smaller 
scale of production. 

The diminishing returns which are claimed to at- 
tend the more complete preparation of the soil for 
crops by additional ploughing, harrowing, etc., are not 



THE LAW OF DIMINISHING RETURNS. 167 

results of natural causes. Where land requires so 
much preparation for tillage, either a proper rotation 
of crops is not carried through or the cultivators of 
the soil lack the capital necessary for better methods. 
In new countries, when the land is first tilled, a small 
amount of labor will prepare the soil as completely 
as it can be done, the land being naturally porous and 
mellow. It is only after years of misuse that land 
requires so much labor as Mill indicates to render its 
tillage most productive, and in the mean time the pro- 
ductivity of the land has rapidly fallen off. When a 
better system of cultivation is introduced, much labor 
is necessary to restore the original condition of the 
land. This restoration, however, being once accom- 
plished, both the return is much increased and the 
labor reduced beyond what it was when the land had 
lost its fertility through misuse. 

The land of a country is in some respects like a coal- 
bed, which can be worked and exhausted, but it differs 
from a mine in that by the use of proper means, its 
productivity can be kept up. In new countries farmers 
do not care for the land because it is cheap ; they do 
not cultivate it, they work it as they would a coal-mine. 
Having exhausted all the natural fertility of one tract 
they move on to new lands, just as when an old mine is 
exhausted a new one is opened. So long as new land 
is accessible this system can be pursued, but if the soil 



168 THE PREMISES OF POLITICAL ECONOMY. 

under such a cultivation gradually loses its fertility the 
law of diminishing returns is not proved, even if less 
labor can for a time produce greater returns. If Eng- 
lish farmers cared not for the future they could pursue 
the same method of agriculture that is followed in 
America, and for some time obtain a much greater 
proportional return at a much less expenditure of labor. 
AVhen, however, the question is what method of culti- 
vation will produce the greatest permanent return for 
the labor expended, the method ordinarily pursued in 
new countries must be excluded from consideration, 
since under it greater labor is required every year to 
produce the same returns, and after a time the land is 
completely exhausted. 

If each nation were completely cut off from every 
other, so that it had to rely solely on its own labor to 
supply all its wants, the small average income of thinly- 
settled countries occupying only the easily cultivated 
laud would be very apparent. It is the possibility of 
exchange with thickly -populated countries that makes 
the return for labor in new countries seem so large 
when compared with other countries. The comparison 
is not a just one, for all the manufactories employing 
cheap labor are in the old countries. Those laborers 
in the old countries who produce the articles consumed 
in the new countries should have their incomes aver- 
aged with those living in new countries, if a correct 



THE LAW OF DIMINISHING RETURNS. 169 

average of the return for all labor from the two differ- 
ent modes of cultivating land is to be obtained. Sup- 
pose in England the average return of labor on the land 
be kept apart from that of labor in the cities, calling 
the value of the agricultural produce the return from 
land and dividing this value by the number of laborers 
on the land, the average return thus obtained would be 
a very high one, much higher than the average return 
obtained in new countries from the easily-cultivated 
land. Every one will probably say that this is not a 
fair way of estimating the average returns of labor 
in a country, yet it is much more just than the ac- 
cepted method of comparing the average returns of 
old and new countries, the old countries having not 
only their own non-agricultural population counted in 
making up their average, but also those laborers pro- 
ducing for the new countries with whom they make 
exchanges. 

Suppose all the French factories and their employes 
be removed to Belgium, would not the average income 
of the remaining inhabitants be much higher than it 
now is, if we accept the method now used in obtaining 
the average income of the people in new countries? 
It is the fallacy of this method that rent and agricul- 
tural wages are added, the sum then divided by the 
number of laborers employed on the land, and the result 

said to be the average return for labor. The correct 
H 15 



170 THE PREMISES OF POLITICAL ECONOMY. 

method of comparing is to take two isolated nations, 
the one thinly and the other thickly populated, or to 
consider as belonging to each nation such a part of 
the non-agricultural population of the whole civilized 
world as would correspond to its agricultural produce. 
From this or any other correct method it would be 
readily seen that the average return for all labor in 
newly-settled countries is much lower than the average 
return from those older countries where much use is 
made of capital to remove the obstacles to cultivation. 
In this case most of the land in the country can be 
tilled, and the advantage of a large population is ob- 
tained along with an increase of the average return for 
all labor. 

Mill, howevei", asserts that a rise in price of agricul- 
tural produce is of itself sufficient evidence that the 
average return for labor has diminished, and in his 
chapter on the increase of production from land he 
says,— 

" Now the most elementary truths of political econ- 
omy show that this (the rise in price of agricultural 
produce) could not happen, unless the cost of produc- 
tion, measured in labor, of those products tended to 
rise. If the application of additional labor to the land 
was, as a general rule, attended with an increase in the 
proportional return, the price of produce, instead of 
rising, must necessarily fall as society advances. . . . 



THE LAW OF DIMINISHING RETURNS. 171 

If, therefore, it be true that the tendency of agricul- 
tural produce is to rise in money price as wealth and 
population increase, there needs no other evidence that 
the labor required for raising it from the soil tends to 
augment when a greater quantity is demanded." 

The higher price of food may indicate that there is 
now cultivated a lower grade of land than the poorest 
formerly tilled, but from this it does not follow that 
the average return for labor is diminished. The aver- 
age return for labor depends not on the labor needed 
to produce the most costly portion of the prpduce, but 
on the relative quantity of the most costly and the less 
expensive portions. Suppose that there are four grades 
of land yielding for an equal amount of labor twenty, 
eighteen, sixteen, and fourteen bushels of wheat to the 
acre, and that the acres of each grade were double the 
number of those of the next lower grade, and that 
while population was increasing enough to demand the 
cultivation of each lower grade sufficient improvements 
were made so that the same labor on each grade of land 
could raise one more bushel to the acre. When only 
lands of the first class were cultivated the average 
return would be twenty bushels to the acre, and the 
price would be fixed by its cost of production. As 
soon, however, as population had increased so as to 
demand the cultivation of the second grade of land, 
the improvements would cause this land to yield nine- 



I'i^ THE PREMISES OF POLITICAL ECONOMY. 

teen bushels, and the best land would yield twenty-one 
bushels to the acre. If the acres of the first class are 
double the number of the second class, the average 
produce of all the land will be twenty and one-third 
bushels to the acre, an increase in the average return, 
yet the price will be higher than before, since the cost 
of production is determined by land yielding nineteen 
bushels to the acre instead of twenty bushels as before. 
When land of the third grade is cultivated under the 
above conditions, the price will be fixed by land yield- 
ing eighteen bushels to the acre, while the average 
return will be twenty and six-sevenths bushels to the 
acre ; and when the fourth grade of land is cultivated 
the poorest land in cultivation will yield seventeen 
bushels to the acre, while the average return will be 
increased to twenty-one and eight-fifteenths bushels to 
the acre. This illustration shows that the average 
return for labor can increase along with an increase of 
the price of food, and that some other evidence than 
the rise in value of agricultural produce is needed to 
prove that the average return for labor has dimin- 
ished. This fact might be illustrated in other ways, 
but these figures bring out the point needing expla- 
nation, that the average return for labor does not de- 
pend on the cost of production on the poorest land 
in use, but on the relative quantity of the land of 
the various grades, and that an increase of the cost of 



THE LAW OF DIMINISHING RETURNS. 173 

production on some of the land does not, as claimed 
by Mill, counteract the beneficial effect of all improve- 
ments. 

Mill's assertion that the cultivation of inferior land 
is in habitual antagonism to the progress of civilization, 
can only be maintained by showing that the tillage of 
the inferior lands reduces the ratio of the superior land 
to the inferior. The progress of civilization causes much 
of the poor land to become good not only through the 
increased use of capital and skill, but also through the 
gradual change in the demand for food, allowing those 
crops to be raised for which the land is best fitted. 
There are two opposing tendencies, the one causing in- 
ferior land to be cultivated, the other changing the infe- 
rior lands into good lands. The supply of inferior lands 
is limited, since there is a definite quantity of land, and 
also an ultimate limit to the productivity of each acre, 
the plants needing space and air in which to thrive. 
For these reasons the quantity of inferior land brought 
into cultivation must gradually decrease with the prog- 
ress of civilization, and finally become exhausted. On 
the other hand, improvements are being made by which 
poor land is rapidly changed into good land, and 
there is no reason why most of it should not become 
good land, if the demand for food is so altered as to 
allow the best use of all land. In this way the ratio 

of the good to the poor land is gradually increased, and 

15* 



174 TEE PREMISES OF POLITICAL ECONOMY. 

whatever increases this ratio enlarges the average return 
for labor. 

All cultivated land may become good land, even if 
some land cannot be improved. The largest gross re- 
turn is not obtained when all the land of a country is 
tilled. Forests are necessary to secure a proper supply 
of rain. If the amount of unimprovable land is not 
greater than what is needed for this purpose, it should 
be thus used, and all the remaining land can then be 
made good land. When this result is brought about, 
there will be no antagonism between the use of inferior 
land and the progress of civilization. The greatest 
gross return will then be obtained along with the 
highest average return for labor. As there will be 
little or no diiference in the fertility of land, the price 
of food will be so low that rent will no longer be an 
important factor in the distribution of wealth. 

The fact that the supply of poor land is so large 
that all of it cannot be used with profit for forests and 
other purposes not requiring cultivation, does not of 
itself establish the law of diminishing returns. Poor 
land can be cultivated only when the price of food is 
high, and the increase in the price of food will raise 
rent and lower wages. Whatever reduces wages will 
diminish the efficiency of labor, and if the poor land 
is cultivated, a less efficient class of laborers must be 
employed than if only good land were tilled. The 



THE LAW OF DIMINISHING RETURNS. 175 

use of cheap labor on the good land will reduce its fer- 
tility, and unless the amount of the produce on the 
poor land is greater than the amount lost by decreased 
efficiency of labor on the good land, the result of an 
effi)rt to increase the means of subsistence by the use 
of the poor land and cheap labor will be a decrease 
instead of an increase of the food-supply. 

Just as the necessity of forests to secure a proper 
rainfall shows that the greatest amount of food is ob- 
tainable when all the land of a country is not culti- 
vated, so the necessity of high wages to secure efficient 
labor shows that there must be many apparent oppor- 
tunities to increase the food-supply by means of cheap 
labor, which cannot be utilized without such a reduction 
of the intelligence and efficiency of labor as would 
more than counterbalance the gain obtained by the use 
of cheap labor. 

The view of nature held by the adherents to the law 
of diminishing returns may be well represented by an 
apple-orchard, in which all the labor required is that 
of gathering the fruit. Some trees will bear more and 
better apples than others, and so long as these' only are 
needed to supply the demand for apples, the return for 
labor will be high ; but when more apples are needed, 
the reward for labor will be less, and will be continu- 
ally reduced as greater and greater quantities of apples 
are required. As any one can pick apples, the supply 



176 THE PREMISES OF POLITICAL ECONOMY. 

will be increased as the reward for labor decreases and 
more of the trees are used to supply the demand. As 
all the work that can be done by dear labor can be 
performed by cheap labor, while some work that dear 
labor cannot perform can be done by cheap labor, the 
use of cheap labor in this case increases the aggregate' 
return for labor, but lessens the average return. 

If all kinds of work were like apple-picking, — the\ 
sort of labor which men performed in the original 
social state before capital and skill were employed, — 
the law of diminishing returns would doubtless be true. 
Fortunately for mankind, there are much easier ways 
of procuring food. There can be no doubt that by 
,ihe use of capital and skill a greater population can be 
.supported, and also with a greater average return for 
labor, than is possible in the primal social state. The 
question where the greater gross and average return 
would be found, can arise only when we compare the 
present social state, where the few are skilful and fur- 
nish capital for the many, who remain ignorant and 
unskilled, with a more advanced state of society where 
each laborer is skilful and saves for himself. In con- 
sidering the gross produce of these two social states, 
those living in the advanced state would be debarred 
from all opportunities to labor where the return was 
small, while those living in the present social state 
would lose where the return was high, inefficient labor 



THE LAW OF DIMINISHING RETURNS. 177 

not producing as much as the skilled but dearer labor 
"which might be employed wherever the return for 
labor was sufficient to remunerate it. Which of the 
two social states could produce the greater gross return 
would depend upon the relation of the good lands to 
the poor. If most of the land is or can be made good, 
the skilled laborers of the more advanced state of so- 
ciety could produce a greater gross return than cheap 
labor and still obtain a high reward for their labor. 
On the other hand, most of the land being poor, cheap 
labor would have a field of employment so large that 
it could produce a greater gross return than skilled 
labor, even if it were less efficient, on the few good 
acres which society possesses. 

To illustrate, let us suppose that in a given country 
one million men can be employed in cultivating the 
land, each man producing two hundred bushels of 
wheat, while on the land not tilled each man could 
produce but one hundred bushels; and, further, that 
if the wages of the laborers were reduced one-half, 
so that the inferior land might be cultivated, their 
efficiency would be reduced ten per cent. If this be 
true, the effect of the cultivation of the inferior lands 
on the gross return would depend upon the quantity of 
the inferior land. The reduction of the wages of the 
laborers employed on the superior land would accord- 
ing to this supposition lessen the return from their 



178 THE PREMISES OF POLITICAL ECONOMY. 

labor ten per cent., or from two hundred million to 
one hundred and eighty million. If the quantity of 
the inferior land were sufficient to employ two hundred 
thousand men, they would produce, at one hundred 
bushels each, twenty million bushels, and the gross 
produce of all the land would be just equal to what 
the superior lands alone produced before the inferior 
land was tilled. Were the quantity of inferior land 
smaller, so that only one hundred thousand men could 
be employed on it, they would produce but ten mil- 
lion bushels, and the gross return would be lowered 
to one hundred and ninety million bushels, a loss of 
ten million bushels. On the other hand, if three 
hundred thousand men could find work on the inferior 
land, they would produce thirty million bushels, and 
the gross return would be increased by ten million 
bushels. 

From this illustration it is evident that the quanti- 
tative relation of inferior to superior lands determines 
whether or not the gross return will be increased by 
the cultivation of both. If the quantity of inferior 
lands be relatively large, their cultivation will increase 
the gross return and lower the average return. When, 
however, the quantity of inferior lands is relatively 
small, their tillage will reduce both the gross and 
average return for labor. 

It has been shown in the previous discussion that in 



THE LAW OF DIMINISHING RETURNS. I79 

a society in which all are skilled and possess capital, 
most of the land becomes good land. If this be true 
in such a society, both the gross and average returns are 
much greater than in the present social state where so 
much use is made of cheap labor. 

The alternatives between which a society must choose 
are less labor and a greater gross and average return 
on the one hand, and more labor and a smaller gross 
and average return on the other. The third alterna- 
tive which the law of diminishing returns implies — a 
greater gross and a less average return — is an impossi- 
bility where the greater part of the land of a country 
is good. It overlooks the necessity of high wages and 
high interest to induce all to save and become skilful, 
the gross return being lessened unless all do this. 

The effect of social progress in increasing both the 
gross and average returns may be represented by sup-? 
posing a series of islands of equal size arranged' in a 
line north and south, each island being more fertile and 
productive than its northern neighbor. The islands 
lying to the south would support a greater population 
and with a greater average return than those to the 
north, more food being raised and at less proportional 
cost. If only the one farthest north were inhabited 
and the rest unknown, population would increase there 
until it would be so great that the average return to 
labor would be lessened. Suppose at this juncture 



180 THE PREMISES OF POLITICAL ECONOMY. 

that the island next south is discovered, and that the 
inhabitants of the first island, rather than have their 
incomes reduced, remove bodily to the new island, 
which can support a larger population and give a 
greater average return to their labor. The population 
still increasing, finally becomes so great that the aver- 
age return again begins to decline. Then let the third 
island be discovered and all the people transfer them- 
selves to it, thereby more than regaining the old aver- 
age return for their labor. So long as new islands 
can be discovered, this process can be repeated, and at 
each removal both the number of the population and 
their average income would be augmented. To make 
this illustration applicable to our purpose we must 
further suppose that to the occupancy of each island 
the condition is attached that if the inhabitants allow 
a reduction in the average return to their labor, they 
must leave the island and return to the one whence 
they came. In this case all those resources which 
allow an increase of population, but require a decrease 
of the average return, could not be utilized, and when, 
on each island, population is increased to the point 
where the average return begins to decline, the increase 
must be stopped, a new island discovered, or the people 
must return to the island to the north, where both the 
population and the average produce of labor have been 
reduced. 



THE LAW OF DIMINISHING RETURNS. 181 

Granting these suppositions, a greater population 
would always be in conjunction with a greater average 
return. There would be but one island in the series 
where people of a given average income could, live, 
and if the incomes of these people were less than that 
of the people of another island, the population would 
also be less. 

I contend that there are such conditions offered by the 
different social states through which each progressive 
society passes. If a greater population is supported, 
the average income is increased, and if the income is 
lowered, society finds itself forced back into a lower 
social state, where its numbers are also reduced. Each 
new social state imposes some new condition, which can 
only be complied with so long as the average return is 
greater than before. The people must gradually learn 
to work regularly, cease to wage war, respect property, 
accumulate capital, demand for food what nature is best 
fitted to supply; and, lastly, they must be intelligent 
and skilled workmen, each saving for himself. As 
these conditions are complied with, both population 
and the average return are increased ; if they are vio- 
lated, both the population and the average return are 
reduced. This is especially true of the last condition, 
as a person will acquire skill and save only as he can 
thereby better his condition. A society all of whose 

members are skilled, each one saving for himself, can 

16 



182 I'iiE PREMISES OF POLITICAL ECONOMY. 

support a larger population than any other and at a 
greater average income. If this high return for labor 
is not maintained, skill will be lost and capital de- 
creased, and only a smaller population will be able to 
find support, and at a lower rate of return for labor. 

If the foregoing facts are brought into their proper 
relation, they will demonstrate the correctness of the 
position that the law of agricultural returns is a law of 
limited not of diminishing returns. Up to a certain 
point, depending on the knowledge and skill of the 
inhabitants, the return increases in proportion to the 
labor expended ; beyond that point no return can be 
had without an increase of knowledge and capital, or 
without a change in the demand for food, by which 
the qualities of the land are brought into better use. 

It is only during an early stage of civilization that 
the law of diminishing returns is true. Then but small 
use is made of skill and capital, and there is a demand 
only for a few articles of food. To a nation that 
relies solely on manual labor to supply its wants, only 
the easily cultivated land has a small cost of produc- 
tion, and as population increases soils must be culti- 
vated that are less productive of the few articles of food 
which are in demand. Only a small proportion of the 
land is good land, and hence the increase of popula- 
tion is detrimental to the average return for labor. 
With the progress of civilization the ratio of the good 



THE LAW OF DIMINISHING RETURNS. 183 

land to the poor is increased, and the disadvantage of 
an increasing population is gradually diminished, until 
at length the ratio of the good to the poor land is so 
great that the advantages of a large population more 
than counterbalance the disadvantages. When, finally, 
each man becomes skilled and saves for himself, and all 
persons so adjust their demands for food to the natural 
conditions by which they are surrounded that all the 
land may be used for what it is best fitted, the average 
return for labor will increase with the growth of pop- 
ulation, and the greatest possible population 'can be 
supported with a much larger average return for labor 
than can be obtained when the number of people is 
more limited. 



CHAPTER VII. 



FREE-TEADE. 



In the previous chapters we have already considered 
the leading principle by which the advantages of free- 
trade between different nations must be determined. 
It has been shown that a combination of cheap labor 
and low interest will produce an approximation of the 
values of food and raw material to that of manufac- 
tured commodities. The power of underselling arises 
from a false economy of skilled labor ; as cheap labor 
gradually displaces the skilled, the price of finished 
articles falls and that of food and raw material is 
increased. If cheap labor and low interest in domestic 
commerce produce an approximation of prices, dis- 
placing skilled labor, the same result will be brought 
about by free foreign exchange, and manufactured 
commodities will be produced by the nation which, 
having the lowest rate of wages and interest, can create 
the greatest approximation of the price of food to that 
of finished commodities. 

There are good reasons for regarding this the most 

important principle determining the advantages of 

foreign exchange. It is true that there are great va- 
184 



FREE-TRADE. 185 

rieties of soil and climate throughout the earth, each 
peculiarly fitted for some particular products, yet the 
demand for food is practically limited to a few articles, 
and if a nation wishes to exchange any considerable 
amount of produce with other nations, these articles 
must be exported, no matter how much advantage it 
may have in other articles. Take the trade of Eng- 
land and India for example. India, doubtless, has 
important advantages over England in the production 
of rice and other tropical articles of food. The de- 
mand for food of this nature in England is very lim- 
ited, as the main articles of English diet are wheat- 
bread and beef, and if India wants English commodities 
to any extent, wheat or beef must be sent in exchange. 
As a result we see the land of India used to produce 
wheat to send to England instead of rice, the article 
for which the land is particularly adapted, so that 
the productive power of India is reduced to but a 
small fraction of what it would otherwise be. As 
another example take the case of Ireland. It is well 
known that the land of Ireland is extremely well fitted 
for potatoes, yet as the demand for food in England is 
not for potatoes, but for beef, the land of Ireland must 
be used for grazing purposes, and the country is thereby 
almost depopulated. So long as the English demand 
only wheat and beef the land of every nation trading 
with them must be used for raising wheat and cattle, no 

16* 



186 THE PREMISES OF POLITICAL ECONOMY. 

matter what may be the advantages which they possess 
for producing other articles of food. The fact which I 
wish to bring into prominence is not that exchange 
with England is disadvantageous, but that foreign 
trade is of little importance to any nation so long as 
the demand for food is limited to a few articles. Of 
what utility is it to one nation that its land will pro- 
duce excellent rye, potatoes, rice, and other similar 
products so long as the nations with which it trades 
have little or no demand for them ? If the list of im- 
ports of any civilized nation be examined, it will be 
seen that nine-tenths, or more, of all the imports are 
manufactured commodities and a few articles for food 
and clothing, which can be produced anywhere. Sugar, 
tobacco, and cotton are the only articles from semi- 
tropical regions which are desired in any considerable 
quantities, and if more lauds in these regions are culti- 
vated than will supply the very limited demand for 
these articles, crops better fitted to temperate climates 
must be produced. 

Certainly the waste of labor is as great when plants 
best fitted for the temperate zone are produced in the 
tropical zone as when tropical plants are raised in tem- 
perate regions. An orange can, it is said, be produced 
in Portugal with half the labor that is required in 
France, and when the French exclude the oranges 
from Portugal they double the amount of labor which 



FREE-TRADE. 187 

would otherwise be needed to procure an orange. That 
this is true I have no desire to deny, but it is easy to 
show that a free-trade policy also causes a like waste of 
labor and to a much greater extent. Suppose the de- 
mand for more oranges were so great that in Portugal 
and elsewhere the land best fitted for oranges could 
not supply the demand, and the price of oranges 
rose so high that they could be raised with profit in 
France. The land in France would be used for 
orange-groves only when all the various grades of 
laud, from the best of Portugal to the French land 
most productive of oranges, have been diverted from 
their most productive use and devoted to the produc- 
tion of oranges. Now the objection urged by free- 
traders against a duty on oranges is that the labor 
employed in orange-groves would be diverted from 
the other industries, where it is most productive. An 
undue demand for oranges would have the same effect. 
When the price of oranges is high, most of the land 
producing them is more productive of other articles of 
food. The very same fields of France whose use for 
orange-groves caused so much complaint on the part 
of the free-traders when the tariff raised the price of 
oranges, are now used for their production. The 
greater demand for oranges certainly does not increase 
the fitness of French soil for orange-groves. If there 
is a reduced return for labor when a tariff causes the 



188 THE PREMISES OF POLITICAL ECONOMY. 

land of France to be used to produce oranges, there is 
a still greater reduction of the efficiency of labor when 
this result is brought about by the increase of the de- 
mand for oranges. The increased demand will cause 
not only the land of France to be used for a purpose 
for which it is poorly fitted, but also large tracts of 
land in other countries less productive of oranges than 
the land of Portugal would be turned into orange- 
groves. 

If an examination be made to discover how much 
land is diverted from its best use by a free-trade 
policy, it will be seen that the waste of labor which it 
causes greatly exceeds that resulting from an opposite 
policy. When a French tariff causes a few acres in 
France to be used for the production of oranges a great 
outcry is raised at the waste of labor, but when free- 
trade causes the land of India to be used for the pro- 
duction of wheat, no free-trader notices the waste of 
labor. Yet in this manner the productivity of the 
land of India is more reduced than is the land of 
France when used for orange-groves. A free-trade 
policy causes the land of the whole world to be used 
for the production of a few articles like wheat, and of 
no few articles will land yield as much as if all that 
variety of food were desired which would cause each 
acre to be used most efficiently. 

There are several good reasons why a free-trade 



FREE-TRADE. 189 

policy will divert the land of exchanging countries 
from its best use. Most articles of food have great 
bulk and weight. When they are carried to a great 
distance, the cost of transportation is so great that 
they become more costly to the consumers in distant 
lands than are the other articles of food, which, 
though supplied by nature less abundantly, can be 
transported with but little expense. Many articles 
of food cannot be preserved, and must be consumed 
at the place where they are produced. They can be 
utilized only by a people living where they are abun- 
dant, and are of no more use to distant lands than are 
the mines of an uninhabited country. If fruits and 
other perishable commodities could be as easily pre- 
served and transported as wheat can be, the whole 
economic history of the world would have been very 
different from what it has been. The food of every 
nation would be other than it is, while the advantages 
of free-traders would be greatly increased. It is, how- 
ever, of no importance to the world that there are 
many kinds of food in other climates so long as the 
cost of transporting them is more of a hinderance to 
obtaining them than the worst tariff would be. Even 
of the articles of food that can be transported, some can 
endure transportation better than others. Corn, for 
example, is much more liable to damage than wheat, 
and hence for cities distant from the centres of produo- 



190 THE PREMISES OF POLITICAL ECONOMY. 

tion wheat will be less costly as a means of support 
than corn, the reverse of what is true in an adjacent 
market. In this way a foreign demand, offering a 
premium for the production of those articles of food 
best fitted for transportation, diverts land from its 
best use, and by reducing the efficiency of labor, pro- 
duces that very result against which free-traders so 
strenuously object when it is occasioned by a protective 
tariff. 

The most important misuse of land, however, arises 
from the habits of that class of laborers which survive 
when a nation steadily adheres to a free-trade policy. 
Only by an extended use of production on a large scale, 
accompanied by cheap labor and low interest, can so 
great an approximation of prices be brought about in 
one nation as to displace the industrial classes in other 
nations where the habits of the laborers are of such a 
nature that they are inclined to save for themselves. 
To produce a great approximation of prices there must 
be on the part of most laborers a demand for those 
articles of food and drink which create in the con- 
sumers the strongest appetite and the greatest desire for 
consumption of food as a source of pleasure. By their 
use the thought of future welfare is displaced by the 
desire for immediate enjoyment, and the cravings of an 
abnormal appetite lead its possessor to work for less 
wages than will those who desire less exclusive pleas- 



FREE-TRADE. 191 

ures. If soup or coffee created a stronger appetite than 
beer or whiskey, and rye-bread and rice were more 
palatable than wheat-bread and meat, the industrial 
centres of the world would be differently located from 
where they now are, and the land of every country 
would be used for producing a very different class of 
articles of food. As it now is, the stimulating food 
and drink demanded by a low class of laborers cause 
most of the land to be used for what it is poorly 
fitted, and free-trade, by assisting the survival of those 
laborers having the strongest appetites, reduces the 
efficiency of labor more than could be done even by a 
prohibitory tariff, which cuts off each nation from the 
advantages of soil and climate possessed by other 
nations. 

When a much higher civilization has displaced the 
present, and the nations of the earth, using a much 
more varied and less stimulating diet, conform to the 
natural conditions by which they are surrounded, 
foreign exchange will be of great importance to them. 
So long, however, as the demand for food is limited to 
a few articles, differences of soil and climate are of 
little moment. The controlling circumstances in 
foreign as well as domestic exchange are the rates of 
wages and interest. Just as in domestic trade the class 
offering the highest price for food survive, so in foreign 
trade one nation can displace the producers of manu- 



192 THE PREMISES OF POLITICAL ECONOMY. 

factured commodities in other nations by causing so 
great an approximation of the price of food to fin- 
ished commodities that it will be more profitable for 
producers of food in other nations to exchange with it 
than with home producers. As, however, the advo- 
cates of free-trade deny this fact and claim that free- 
trade is always advantageous to both exchanging 
nations, it is necessary to examine the arguments by 
which they seek to establish their position. 

One of Adam Smith's favorite arguments is that it 
is good policy in a family to sell in the dearest and 
buy in the cheapest market, and that what is good 
policy for a family cannot be a poor policy for a nation. 
In this argument he overlooks the important difference 
between a family and a nation. In a family the dis- 
tribution is or ought to be according to the needs of 
the different members, or according to the part taken 
by each in production. In a nation this is not the case. 
Each class has its own interests and desires, and looks 
out for them alone, and is perfectly willing to sacrifice 
the interests of others to its own welfare. If rent rises 
and wages and interest fall, landlords do not share their 
extra gains with the other classes, nor do either of the 
other classes relinquish a profit or share it with the 
others. Nations are not families, at least nations where 
competition exists. Adam Smith's argument would 
hold good in a commune where the share of each per- 



FREE- TRADE. 1 93 

son was given according to any plan which allowed 
none to be merely landlord, capitalist, or laborer, the 
division of produce taking place, as it does in a family, 
according to some maxim of justice. 

Free competition spoils all this, and compels the 
people of nations to act in a way different from that 
they would follow if they were a family or commune; 
and nothing can be known of the effect of a measure 
until it is determined what effect it will have on the 
distribution of wealth. 

When one of the exchanged products is an article of 
food or a product of mines, the exchange becomes dis- 
advantageous to the country exporting this produce, 
since the additional quantity needed for export can 
under present conditions be obtained only at an in- 
creased proportional cost, and the gain in the ex- 
change will be counteracted by the increased cost at 
which the additional supply is produced. 

The capitalists and laborers lose not only on the 

amount exported, but on all produce, as there is only 

one price for an article in the same market, and hence 

the demand for export raises the price not only of the 

part sent abroad but of all that consumed at home. 

Since only a small part is ever sent abroad, the gains 

of the landlords from this part are only a small fraction 

of the gains which the increase in price enables them 

to obtain from the capitalists and laborers, who are 
I n 17 



194 THE PREMISES OF POLITICAL ECONOMY. 

compelled to purchase all their food at the augmented 
price. 

It may be objected that if the nation as a whole lose 
more than it gains the exchange would not take place. 
This would be a valid objection if there were no sepa- 
rate classes in the country, and the loss fell on the same 
persons who make the gain. Those who make the gain, 
however, are the landlords, while the losses fall either 
on the capitalists or on the laborers or on both. 

Economists often call attention to the absurdities of 
general high prices, but they usually fail to perceive 
that the same absurdity is involved in general low 
prices. To reduce the value of one article raig|i^ the 
value of that for which it is exchanged just as much as 
raising the value of one commodity decreases the value 
of the commodities for which it is given. If, then, it 
is desirable to discover what are the permanent effects 
of a change in foreign trade, it can be done only by 
examining what articles are lowered and what are 
raised in value. Other methods will give us only the 
temporary effects which accompany the change, without 
revealing anything of the final results which are sure 
to follow. 

If two countries are thrown into commercial rela- 
tions, in one of which food is cheaper than in the 
other, all the laborers and capitalists in the former 
(where food is cheap) will lose, while the same classes 



FREE- TRA DE. 195 

in the other country will correspondingly gain. The 
opposite, however, will be the effect in the case of 
the landlords, since in the first rents will rise, while 
in the second they will fall to a like degree. With 
free-trade existing between England and America, 
the price of food in both nations must be nearly 
the same, and would be just the same but for the 
cost of transportation. The price of food is raised 
in America and lowered in England. At the same 
time in America manufactured goods fall, while in 
England they rise. This would be advantageous to 
English capitalists and laborers, and to a like degree 
disadvantageous to those of America, while American 
landlords would gain at the expense of the same class 
in England. 

It may, however, be urged that American capitalists 
can avoid this fall of wages 'by occupying new lands 
and becoming landlords and farmers themselves. In 
a very new country this can be done, often without 
much loss, but the older the country becomes the more 
difficult is the change, and when the lands are once 
occupied it is impossible. 

A favorite argument of the free-traders is that under 
a system of free-trade the same amount of capital and 
labor is employed as under a system of protection, and 
in a more efficient manner. When we buy we also sell, 
and we must use the product of home labor to buy 



196 THE PREMISES OF POLITICAL ECONOMY. 

foreign goods, and hence, it is claimed, when goods are 
purchased on a foreign market as much home labor and 
capital are employed as before, while they are used 
more efficiently. As soon as rent is paid in a country 
a given value of food does not contain the same quan- 
tity of labor as the manufactured commodities for 
which it is exchanged. If a farmer sells two thousand 
dollars' worth of corn and pays six hundred dollars 
rent, the product only contains fourteen hundred dol- 
lars of wages and profit ; hence where a change is made 
by which food is exported instead of manufactured 
articles, much less labor and capital are employed, as 
much less as the amount of the rent. 

Whenever an article is purchased in a foreign market, 
it is true that a domestic product must be given in ex- 
change for it, but that does not prove that the home 
labor market has not thereby suffered a contraction. 
Suppose silk for the English market had been pur- 
chased in France, and English cutlery be sent to France 
in exchange. If now the silk should be manufactured 
in England and exchanged for the cutlery, the demand 
for cutlery would not be reduced, nor would the de- 
mand for any other article decrease. The demand for 
food would increase to supply the additional labor em- 
ployed by the silk-producers, and they would have the 
cutlery, before exported, with which to purchase the 
needed food. In France, on the other hand, the demand 



FREE-TRADE. 197 

for silk would be reduced by the value of the cutlery 
formerly imported, and there would be a quantity of 
food of equal value, formerly consumed by the silk 
laborers in France, for which there would be no de- 
mand, the laborers now having no cutlery to exchange 
for the food. There being in France a surplus of food, 
and in England a surplus of cutlery of equal value, 
tliese would be exchanged for one another. The result 
of the exchange would be, English cutlery would go to 
France as before, while food would be sent to England 
to pay for it instead of sill^ The demand for labor in 
England would be increased by the number employed 
by the silk-producers, while to a like amount would 
the demand for labor in France decline. 

A demand for a product of home industry gives its 
producers the same power to purchase goods in a 
foreign market as those with whom they exchange 
previously had, and foreign commerce does not thereby 
decline unless the producers of the commodity buy 
food which was formerly exported. In any other case 
the same articles will be exported as before, and food 
imported instead of the commodity now manufactured 
at home. 

The most familiar argument used to support free- 
trade is the doctrine of comparative cost, which was 
first expounded by Ricardo, and has ever since been 

accepted as the corner-stone of the free-trade position. 

17* 



198 THE PREMISES OF POLITICAL ECONOMY. 

This doctrine asserts that the exchange of commodities 
in foreign commerce is not determined by the absolute 
cost of production, but by the difference in the com- 
parative cost. 

If one of two countries has the advantage in pro- 
duction in all respects, and to the same degree, there 
would be, it is claimed, no exchange of commodities; 
but if the advantages be greater in some commodities 
than in others, an exchange would take place. 

Let me illustrate by a familiar example. If as much 
cloth can be produced in Poland for one hundred days' 
labor as can be produced in England by one hundred 
and fifty days' labor, while the corn which is produced 
in Poland by one hundred days' labor cannot be pro- 
duced in England short of two hundred days' labor, a 
sufficient motive for exchange would exist. With the 
.quantity of cloth produced in England for one hun- 
dred and fifty days' labor England could purchase as 
much corn as was produced in Poland for one hundred 
days' labor, which would be as great a quantity as 
could be produced in England by two hundred days' 
labor. By importing corn from Poland, and paying 
for it with cloth, England would obtain for one hundred 
and fifty days' labor what would otherwise cost her two 
hundred days' labor. 

The fallacy in this argument lies in the erroneous 
conception of the cost of production, by which the 



FREE- TRADE. 199 

effect of rent is disregarded. Rent, we are told, is 
not an element of the cost of production, the cost being 
measured solely by the number of days' labor and ab- 
stinence required to produce a commodity. In other 
words, the cost of production is held to be affected 
only by wages and profits. 

Now, rent does not affect the cost of production in 
the sense that it makes general high or low prices, but 
neither do wages nor profits. High Avages or profits 
do not make general high prices ; they affect prices 
only inasmuch as different articles have, as elements 
of their cost, wages and profits in different propor- 
tions. If in the cost of one article wages enter as an 
element of cost more largely than in another article, 
the first will rise and fall in value as wages rise and 
fall, while the value of the second will change in an 
opposite direction. It is in this way that rent affects 
the cost of production. 

As rent increases, those articles in whose value rent 
enters more largely will rise in price, while others in 
which rent enters to a less degree will fall in value. 

Agricultural products are, of course, those into the 
price of which rent enters most largely, and these will 
rise in value as rent rises; they are, tiierefore, the articles 
which it is least advantageous to produce at home and 
most advantageous to import from abroad. This argu- 
ment, put in the terminology of Ricardo and Mill, is 



200 THE PREMISES OF POLITICAL ECONOMY. 

as follows : The cost of production is measured by the 
number of days' labor and abstinence. But the num- 
ber of days' labor required to produce a given quantity 
of food depends upon the amount required for con- 
sumption, The greater the gross quantity required 
tlie larger the quantity of labor which must be used to 
produce each part of it, and hence, with every increase 
in the demand for food, its price will rise and that of 
manufactured articles will fall. Labor and capital are 
^ efficient as formerly in all manufactured articles, 
but less efficient in the production of food. Since, 
according to the doctrine of comparative cost, those 
articles of commerce in which the country's labor is 
most efficiently employed are exported, and those in 
which the labor is least efficient are imported, food will 
now be imported and manufactured goods exported. 
Whether or not rent is admitted as an element of the 
cost of production makes no difference in the ar- 
gument if the fact is kept in view that the cost of 
production of food increases, and the efficiency of the 
labor used in its production decreases, as the pressure 
of population becomes greater. This reveals why 
profits do not rise when wages fall, why the character 
of the external trade changes when wages and profits 
fall, and why the comparative quantity of labor re- 
quired for the production of different commodities 
changes as population increases. 



FREE-TRADE. 201 

Let US suppose, as does Mill, that one hundred days' 
labor in producing either cloth or corn would yield as 
much in Poland as one hundred and fifty days' labor 
in England. In that case, of course, no, trade would 
follow, but if rent should rise in one country and not 
in the other, exchange would become profitable. If 
rent in England should increase through the demand 
for more food, so that the corn which could be pro- 
duced in Poland for one hundred days' labor now re- 
quires one hundred and sixty days' labor in England, 
as would be the case when rent equalled ten days' labor, 
the trade would be profitable, since now the return of 
one hundred and fifty days' labor in cloth, if taken to 
Poland, will exchange for the product of one hundred 
days' labor in corn, — an amount equal to that obtained 
in England by one hundred and sixty days' labor, — 
ten days' labor would be saved, overlooking the cost 
of transportation to illustrate the underlying principle. 

But what would be the effect in Poland? Either 
profits and wages there must fall, or all the food will 
be shipped to England, and if they fall enough so 
that the rent in Poland is equal to that in England, 
the trade will again cease. If rent should again rise 
in England through the cultivation of poorer land, so 
that it requires one hundred and seventy days' labor to 
procure the amount of food formerly produced in one 
hundred and fifty days, trade with Poland would again 



202 THE PREMISES OF POLITICAL ECONOMY. 

be profitable, for the comparative cost would be again 
favorable to exchange, and Polish capitalists and la- 
borers would again be compelled to give up another 
portion of their profits and wages or let the food be 
exported to England. 

In this case we supposed that rent rose in England, 
which was naturally at a disadvantage both in corn 
and cloth; but the same effects would take place if 
rent should rise in Poland, for England would now 
be compelled to pay a like rent or have its food 
shipped to Poland. For if rent rose in Poland so 
that the corn formerly produced in one hundred days 
now cost one hundred and ten days' labor, and the 
product of one hundred days' labor in cloth be taken 
to England, it will exchange for the product of one 
hundred and fifty days' labor in corn; this, when 
brought back to Poland, would be the amount obtained 
there for one hundred and ten days' labor. Hence the 
trade would be profitable, and would continue until the 
English wages and profits were so reduced that they 
could pay a rent equal to the rent of Poland, when 
exchange would again cease, unless a subsequent rise 
of rent in Poland should again make trade profitable 
and cause further reductions of profits and wages in 
England. 

The foregoing illustrations show the effect of rent on 
foreign trade when one of the exchanged commodities 



FREE-TRADE. 203 

is an article of the food-supply, but the effect is just as 
marked when both the exchanged articles are manu- 
factured commodities. If it costs eighty dollars to 
make in France a quantity df silk which in England 
costs one hundred and twenty dollars, and if it costs 
ninety-six dollars in France to make a quantity of 
cloth which in England is made at a cost of one 
hundred dollars, then, according to the doctrine of 
comparative cost, it will be profitable for the French 
to buy cloth of the English and for the English to 
buy silk of the French, although France has an ad- 
vantage in the production of both silk and cotton. 
This would be true provided there was nothing but 
cloth in England which the French wanted and 
nothing but silk in France desired by the English; 
that is, so long as the trade is confined to cloth and 
silk it would be profitable and advantageous. 

There is, however, an important element omitted, 
one which changes the entire outlook of the case. 
There is a class of articles which are always in de- 
mand in France, England, and in all other countries, 
namely, articles of food. A bushel of wheat or a bag 
of potatoes is just as useful in one country as in an- 
other. Agricultural produce can always be used to 
procure foreign goods, to settle any balance of trade, 
and is the usual method by which the balance of trade 
is settled. Before any determination of the profit or 



204 THE PREMISES OF POLITICAL ECONOMY., 

loss in any exchange can be made, the price of food 
must always be brought into consideration, as with any 
of the articles of food the balance can be settled and 
the course of trade changed. To determine in our 
illustration what would be the course of the exchange, 
we must first determine the price of food in both coun- 
tries. The result of this investigation will decide what 
will be the result of the exchange. Either the price of 
food in England is lower than that of France, equal 
to it, or dearer. If the price in England is lower than 
that in France, or equal to it, all the cloth and silk of 
both countries will be manufactured in France. Over- 
looking the cost of transportation, no one in England 
will pay one hundred dollars for a quantity of cloth 
when he can get it by sending ninety-six dollars' worth 
of wheat to France, and still less will any one pay 
one hundred and twenty dollars for silk in England 
when eighty dollars' worth of wheat will buy it in 
France. So long, then, as the price of food is not 
greater in England than in France, the manufacture 
of both silk and cloth in England will be impossible, 
and all of both articles needed in England will be 
obtained from France, food b'eing given in exchange. 

If, however, the price of food in England is higher 
than in France, the course of trade will be changed. 
Suppose the quantity of food requisite to procure 
ninety-six dollars' worth of cloth in France were worth 



FREE-TRADE. 205 

one hundred and five dollars in England. In this 
case all the cloth would be manufactured in England 
both for France and England, although according to 
our supposition the same labor in France will produce 
four dollars' worth of cloth more than in England. 
For no one in France will give ninety-six dollars for a 
given quantity of cloth if this money invested in food 
will sell for one hundred and five dollars in England, 
and with one hundred dollars of this he can purchase 
the amount of cloth for which he would have to give 
ninety-six dollars in France, as by the exchange with 
England he could save five dollars. If, again, the 
price of food in England were still higher, so that the 
quantity of food worth eighty dollars in France cost 
one hundred and twenty-five dollars in England, 
neither cloth nor silk would be manufactured in France, 
although the same labor in France will produce forty 
dollars' worth of silk more than in England. Food 
costing eighty dollars in France would bring one hun- 
dred and twenty-five dollars in England, and by ex- 
pending one hundred and twenty dollars there, the 
same quantity of silk could be obtained which would 
cost eighty dollars in France ; that is, by sending food 
to England and importing cloth and silk a profit could 
be made, although the labor of France had according 
to our supposition a decided advantage in the produc- 
tion of both commodities. 

18 



206 'I'HE PREMISES OF POLITICAL ECONOMY. 

The difference between the prices of raw material 
and food and those of finished commodities determines 
the rate of wages and interest. If in one country this 
difference is small, all countries which exchange with 
it will be forced to reduce their wages and profits to its 
rates or lose their food-supply and other raw material. 

Suppose that in all countries but one, fifteen yards of 
calico or three yards of woollen cloth exchanged for a 
bushel of wheat, and that in the remaining country 
twenty yards of calico or four yards of woollen cloth 
exchanged for a bushel of wheat. As calico, woollen 
cloth, and other like articles can be produced in any 
quantity demanded, this one nation could produce 
enough of these to supply all the other nations, and 
as it offers better terms to the owners of wheat than do 
the home-producers of cloth and calico, it would obtain 
all the wheat raised in the various countries so long as 
the home-producers of cloth and calico demanded a 
ratio of exchange less favorable to landlords than that 
offered by the nation having cheap labor and low in- 
terest. Food will not have two values in the same 
market, but will all go to those who offer the highest 
price, if no legal obstacle is placed in the way. It is 
only by duties placed upon the export of wheat, or on 
the importation of cloth, that fifteen yards of calico or 
three yards of woollen cloth can be made to exchange 
for a bushel of wheat, if for this bushel a foreign 



FREE-TRADE. 207 

nation offers twenty yards of calico or four yards of 
woollen cloth. 

So long as foreign trade is profitable, each nation to 
a great degree has it in its power to determine what 
shall be the ratio of exchange between raw materials and 
manufactured commodities. When England adopted a 
free-trade policy she did it to change the ratio of ex- 
change, so that more food should exchange for a smaller 
quantity of manufactured articles. The importation 
of food lowered its price, reduced rent, and raised 
wages and profits. This even free-traders can see, but 
what they fail to perceive is that the opposite of this 
must be the effect on the other nations exporting food. 
In these countries the price of food and rent will be 
raised, and wages and profits will decline to a like 
amount. 

The income of a farmer is derived partially from 
rent and partially from the labor and capital which he 
employs. A rise in the price of agricultural produce 
increases his income from rent, but reduces that derived 
from labor and capital, and the amount of his gain 
above his loss will be indicated by the rise in the price 
of his land. If free-trade is adopted, the price of land 
will be high and wages and interest low, and the owners 
of land will have all the profit arising from the high 
price of food. This does not show, however, that the 
farmers as a class will be benefited, since they are 



208 THE PREMISES OF POLITICAL ECONOMY. 

usually not the real owners of the soil in countries 
where land has a high price. The real farmers suffer 
along with the other classes, as their wages and profits 
are determined by the same circumstances, while those 
who gain by the high price of land may live wherever 
they choose, and this will usually be far away from the 
places from which they draw their income. 

The welfare and prosperity of every nation demands 
that the value of food and other raw material should be 
as low as possible in comparison to that of other com- 
modities, the whole value of which is made up of wages 
and profits. The policy which will bring this about 
is the best one for a nation to follow. I do not wish 
to assert that it is never desirable that the value of food 
or other raw material should be raised at the expense 
of wages and profits. Such a policy will often produce 
good results, if the view which I have advanced else- 
where of the causes and conditions of rent is correct. 
A high price of food is often necessary to induce men 
to overcome those obstacles which cause most of the 
land of a country to remain in a poor state of cultiva- 
tion or not to be cultivated at all. The land must be 
drained, forests and other obstacles must be removed, 
and this will only be done when the value of food is 
high. When these obstacles are once removed, the 
price of food may fall without the supply being de- 
ceased. The same is true of mines. There are many 



FREE-TRADE. 209 

expenses involved in the opening of mines which will 
only be incurred when the value of mineral products 
is high ; but, as in the case of the food-supply, when 
mining industries are once placed in a prosperous con- 
dition, the supply of mineral products will not be re- 
duced even if there should be a great reduction in their 
value. It should, however, always be kept in mind 
that such bounties to land-owners, whether in the form 
of free-trade, when the foreign price is higher than the 
domestic, or of protection, when the foreign price is 
the lower, are at the expense of wages and profits, and 
should be discontinued as soon as possible, so that the 
value of food and other raw material may be low in 
comparison to other commodities. To accomplish this 
result duties either on the exportation of food or on the 
importation of manufactured commodities will be neces- 
sary so long as any foreign nation will offer more for 
food or other raw material than would be offered by 
domestic producers if there were no foreign demand. 

These illustrations show that we cannot determine 
the character of foreign trade by considering alone the 
efficiency of labor in the different countries, as the result 
is conditioned by the price of food, and until this is 
known nothing can be determined as to the course of ex- 
change. Everything may be manufactured at a point 
where the labor of the world is most inefficient, if at 

that point the pressure of the demand for food is so great 
18* 



210 THE PREMISES OF POLITICAL ECONOMY. 

as to cause its price to be higher there than elsewhere. 
The increase of rent disturbs the natural course of com- 
merce and forces upon each nation as unequal a dis- 
tribution of wealth as that of the nation which suffers 
most from this cause. A nation has only one means 
to protect its people from the high price of food caused 
by the unequal distribution of wealth in a neighboring 
nation, and that is by duties levied either on the impor- 
tation of commodities or on the exportation of food. 
If neither of those means are resorted to, nothing can 
prevent such an approximation of the. value of food 
and other raw material to the value of manufactured 
commodities as will produce a low rate of wages. 



CHAPTER yill. 

THE MEANS OF MAINTAINING A HIGH STANDARD OF 
LIFE. 

It has long been a current maxim that the use of 
cheap food is destructive of a high standard of life, and 
keeping in mind the facts proven in the preceding 
chapters, it is easy to see why such an opinion should 
be prevalent. The cheap kinds of food are those 
whose production requires the least skill and capital, 
and hence a lower class of labor is employed than is 
possible where more intelligence is requisite. Wher- 
ever nature does much and man but little, a low class 
of laborers can accomplish all that is to be done. 
The more intelligent classes, as the price of food rises 
above what they can pay, gradually disappear, leaving 
society made up of two distinct classes, the very rich 
and powerful on the one hand, the poor and oppressed 
on the other. 

What makes the difference, for instance, between 

England and Egypt lies in the fact that in England 

the obstacles to be overcome are so great that a much 

higher class of labor must be employed than is the case 

211 



212 "THE PREMISES OF POLITICAL ECONOMY. 

in Egypt, wh^re nature, by means of the river Nile, 
keeps up the fertility of the land and allows methods 
of cultivation to be employed which would ruin Eng- 
land in a few years. In all warm countries, such as 
India, Cuba, and Mexico, little clothing is required, 
food is cheap and abundant, and nature does so much 
that little or nothing is required of man but to gather 
the food which nature has prepared. As there are no 
obstacles to be overcome, the lowest classes of men sur- 
vive and displace their betters. * 

The effect on the standard of life of a lack of ob- 
stacles to be overcome is plainly visible in the Southern 
States of the Union as compared with the Northern 
States. If a low class of labor in the North by the 
use of the hoe and other rude implements could have 
produced as great a surplus above the cost of produc- 
tion as is the case in Southern States, slaves would 
have been employed in the North as well as in the 
South, and the economic condition of the North would 
have been no better than that of the South. What 
saved the North was the fact that slaves and other low 
classes of labor were not profitable. Thus laboring 
men with a much higher standard of life were allowed 
to survive in the North than would have been the case 
had the obstacles been fewer and less difficult to sur- 
mount. 

The same condition of things can be observed in all 



MAINTAINING A HIGH STANDARD OF LIFE. 213 

parts of the world. Wherever the obstacles are few the 
people are low and ignorant, while as the obstacles in- 
crease the inhabitants become more intelligent, since 
the more ignorant and inefficient classes cannot survive. 
Different societies and different classes in the same so- 
ciety can be correctly graded by the difficulties which 
stand in the way of making a living requiring skill, 
intelligence, and capital to overcome. If little or no 
skill and capital are required in a country, the people 
will be ignorant and depraved, and lack the energy 
and other qualities necessary to cause a high civilization. 
It is only where the means of supporting a low class 
of population are absent that the higher and more in- 
telligent classes are able to displace their inferiors. 
Wherever game or fish is plenty, or cheap food is ob- 
tainable, as potatoes in Ireland or rice in India, there 
is sure to be found a low class of inhabitants. None 
of these means of support offers any obstacles which 
cannot be overcome by the lowest classes of society, and 
the intelligent and skilful, having no advantage in the 
conflict for life, either disappear or sink to the level of 
their inferiors. 

The intelligence and enterprise of any society de- 
pends upon the relative numbers of the occupations re- 
quiring skill and capital to those which require little or 
none of these requisites for their successful prosecution. 
If in but few places skill and capital are required, 



214 THE PREMISES OF POLITICAL ECONOMY. 

while the mass of the people can exist without them, 
then a low civilization is a necessary consequence. On 
the other hand, if the greater part of the population 
must be intelligent and save capital, a high civilization 
will be the result. Whatever can be done by cheap 
labor is always done by it, and the intelligent classes 
are confined to those occupations which require so much 
skill that the lower classes, not being able to perform 
the work, are shut out from competition. 

For these reasons, a high civilization has been de- 
veloped only in countries where the obstacles were so 
great that only the more intelligent could survive. 
Even here it is insecure, as the obstacles decrease as 
the country advances in civilization. Every improve- 
ment makes it possible for a lower class to survive, and 
progress is retarded and often completely stopped by 
the relative increase of the lower classes, which the 
removing of obstacles, insurmountable to them alone, 
has made possible. When land is once cleared of woods 
and drained, and stones and other like hinderances to 
cultivation removed, succeeding generations do not 
have to do these things over again, and a class of 
laborers come in which lack the energy that was 
necessary to overcome the difficulties to be found in 
all new countries. 

Production upon a large scale and the use of ma- 
chinery have the same detrimental effect, for the pro- 



MAINTAINING A HIGH STANDARD OF LIFE. 215 

portion of the intelligent to the unintelligent is greatly 
lessened by their use. All the capital in large estab- 
lishments being furnished by a few persons, and all the 
intelligence by a few skilled mechanics and foremen, 
all the work can be performed by a very low class of 
laborers, who drive out the skilled and intelligent by 
the low price at which they offer their services. 

The reduction of the cost of transportation and the 
increase of commerce operate in a like manner, as they 
allow a class of laborers who have not energy enough 
to immigrate, to ship the produce of their labor so 
cheaply to the new countries as to lessen the return 
which the laborers of these countries would otherwise 
obtain for their labor. At the same time the low rates 
of passage to the new countries cause the immigrants 
to be of a much lower grade of intelligence than they 
would otherwise be if commerce had more obstacles to 
encounter. 

Every improvement has the same effect as if the 
country were removed farther south to a place where 
less energy was required of its inhabitants, and if 
progress, as it is likely to do, keeps on in the same 
direction as in the past, all the present civilized nations 
will soon be in a position similar to that occupied by 
Egypt and India, and the difficulties of keeping up a 
high civilization will be as great as they are in these hot 
countries. The proportion of the occupations requiring 



216 THE PREMISES OF POLITICAL ECONOMY. 

intelligence as a condition of success in all civilized 
nations is constantly decreasing, and may in time be- 
come as small as it now is in either Egypt or India. 

If these facts be true, we cannot rely on natural 
causes to protect us from the evils arising from igno- 
rance. These evils, assisted by free competition, oper- 
ate against the intelligent and aid the success of cheap 
labor when combined with low interest. Unless as the 
natural obstacles which prevent the survival of the 
ignorant are lessened, social obstacles which have a 
like effect are put in their places, we cannot but expect 
that the low and ignorant will gradually displace the 
intelligent, until at length civilization itself will be 
destroyed by decrease of those classes which sustain it. 

Just as the dam which, by obstructing the free pas- 
sage of the water and furnishing the power by which 
the mill is propelled, is gradually destroyed by the 
force of the water and the level of the water lowered 
so that at length the water has not power to turn the 
mill, so progress and improvements diminish the force 
of civilization by reducing the obstacles which prevent 
the survival of the ignorant until civilization loses all 
its force. 

We would not think of permitting the level of the 
mill-pond to be lowered, nor of forbidding repairs be- 
cause natural causes had lowered it ; nor should we per- 
mit the fact that progress is gradually removing the 



MAINTAINING A HIGH STANDARD OF LIFE. 217 

obstacles which uphold intelligence to interfere with our 
supplying the place of those obstacles with others of a 
social nature which will accomplish all that the natural 
obstacles have done and in a better manner. 

It is only in social affairs that the theory prevails 
that men should do nothing, that they should leave 
everything just as they happen to find it, and not try 
by the use of intelligence to improve on what has been 
given them by nature. We do not leave swamps un- 
drained because water naturally stays there, nor do we 
suffer mad dogs to run loose because hydrophobia is the 
result of natural causes; neither should we fold our 
hands and allow a decline of intelligence because the 
course of natural events tends that way. 

Considered by itself, it is not a cause for regret that 
the labor of the present is easier than that of the past, 
that machines do not need the skill of former times to 
tend them, and that production on a large scale is moi-e 
mechanical and requires the use of much less intelli- 
gence. Nor is it a necessary misfortune that food is 
cheap and plenty, and that but little clothing is needed 
in warm countries. It is only when an easy mode of 
getting a living allows men to be careless and indolent, 
and permits the continuance of low social classes not 
otherwise possible, that these things, really beneficial 
under other conditions, become a curse. 

The causes which assist the survival of the ignorant 

K 19 



218 THE PREMISES OF POLITICAL ECONOMY. 

arise from an exchange of services by which laborers 
do less than they would have to do if they lived in an 
isolated state,* while a few capitalists not only take 
care of themselves but also supply deficiencies of the 
laborers. 

Capital, intelligence, skill, and manual labor are 
required to overcome the obstacles which are placed by 
nature between us and the things we desire. If every 
man were isolated, or so situated that he had in all 
respects to do his part towards surmounting these 
hinderances to the gratification of our desires, none 
could survive but those who had all the requisites for 
mastering the difficulties of nature. 

In a new society, so long as every one is compelled 
from the necessities of the case to devote his whole 
energies to the care of himself and family, none can 
survive but those who have the requisite qualities. 
As soon as some persons have a surplus this can be 
and always is used to allow the introduction of social 
classes who are more or less deficient in the needed 



* The term " isolated state" in this and following passages is 
not used in an absolute but in a relative sense, to denote that form 
of civilized society in which, owing to a lack of any extended 
division of labor and to the consequent imperfect development 
of exchange, each individual man must be ahle to produce, either 
alone or in connection with his immediate family, nearly all the 
different kinds of material commodities which he wishes to enjoy. 



MAINTAINING A HIGH STANDARD OF LIFE. 219 

qualities, and who must rely upon others better equipped 
than themselves for mastering those difficulties which 
are insurmountable to the ignorant when by them- 
selves. A few persons of skill and surplus capital 
form a combination with those who have only manual 
labor to offer in exchange for what they desire, and 
this combination is able to undersell competitors who 
combine their own skill and capital with their own 
labor. When this happens the accumulation of capital 
lowers the rate of interest to a minimum, and the rapid 
increase of population, which is always an accompani- 
ment of ignorance, causes low wages. 

If any society wishes to continue in a progressive 
state, the sucgess of the combination just mentioned 
must be prevented by such social restrictions as will 
allow none to compete in the combinations of labor 
and capital except those who have the qualities that 
would enable them to survive in an isolated state, 
where they would of necessity depend entirely upon 
their own exertions. As intelligence, skill, and capital 
are necessary to overcome the difficulties placed about 
us by nature, the possession of these indispensable 
conditions to success should be required of all persons 
desiring employment, or enough more than the average 
of one of the conditions should be demanded to make 
up for deficiencies in regard to other conditions. If a 
person does not possess capital, more than ordinary 



220 THE PREMISES OF POLITICAL ECONOMY. 

intelligence and skill should be required of him; and 
if he does not possess them, he should be excluded 
from all places where he would through his deficien- 
cies injure those who have prepared themselves in a 
proper manner to overcome the natural obstacles which 
interfere with our accomplishing what we desire. It 
is the want of such social restrictions that allows the 
gradual lowering of the rate of wages which accom- 
panies the progress of civilization. In each new genera- 
tion the relative number of those who possess the qual- 
ifications necessary to survive in an isolated state is re- 
duced, and the average amount of the deficiencies of the 
laboring classes below the original standard is greatly 
increased. Every obstacle which, once surmounted, is 
forever set aside, every improvement which simplifies 
or lessens manual labor, every change in production 
from a smaller to a larger scale of operations, and 
every introduction of machinery which displaces skilled 
labor, increases the amount of the deficiencies which 
the laboring classes may possess without their being 
thereby overcome in the struggle for subsistence that 
the survival of the ignorant brings upon society. 

There is but one way in which the gradual decline 
of wages can be prevented. In those occupations 
where the combinations of cheap labor and low interest 
are likely to succeed there should be required of all 
laborers seeking employment such tests of intelligence 



MAINTAINING A HIGH STANDARD OF LIFE. 221 

and skill as will exclude all classes below the average 
standard placed by nature for those who labor in an 
isolated condition and must possess in themselves all 
the requisites to success. If in a factory machinery is 
introduced by which a lower class of labor can be 
employed than formerly, society instead of allowing 
such persons to displace their betters should require 
that all subsequent laborers should have the same 
amount of intelligence and skill as was necessary in 
the case of those previously employed. 

Ignorance and poverty will prevail among the labor- 
ing classes so long as no sufficient incentive is given 
these classes to increase their intelligence. If in a 
given factory the proportion of the unskilled labor to 
the skilled is ten to one, as is usually the case, ten of 
every eleven laborers can have no hope of promotioi^. 
Any amount of skill which they may possess will have 
no economic value to them, and as they have no in- 
ducement to become skilful they will remain in igno- 
rance and poverty. Suppose now that from social re- 
strictions none but skilled labor could be employed in 
the factory. In this case wages of skilled labor would 
have to be paid to all, and the ten unskilled men would 
now have a motive that would be sufficient to cause 
them to increase their skill and general intelligence up 
to the social standard. There are probably not five 

per cent, of the laboring population of any civilized 

19* 



222 THE PREMISES OF POLITICAL ECONOMY. 

country who would not willingly spend many years in 
preparing for their trade if thereby their future wages 
would be doubled. As it now is, if one parent keeps 
his children out of school he gains their wages, which 
another parent who sends his children to school loses. 
When these children, having become men, come into 
competition with one another the ignorant are at no 
disadvantage, since no test of intelligence is required. 

The only advantage of the intelligent is that one in 
ten can obtain some recompense for the expense of his 
education by obtaining a position requiring skill and 
intelligence, and so long as this state of affairs continues 
there can be but one result, — nearly nine-tenths of the 
population will belong to the lowest classes of society, 
and will be a hinderance to all social progress. 

Both a high rate of interest and high wages are 
necessary to preserve a high standard of life, and 
any plan of social improvement which would secure a 
high rate of wages by lowering interest is defective. 
A reduction of the rate of interest can only be accom- 
plished by such a diminution of the inducement to 
save as will cause all capital to be concentrated in the 
hands of a few persons. A class of laborers who do 
not save for themselves will always be so deficient in 
intelligence as to lack those qualities necessary to main- 
tain high wages, and they will necessarily sink to as 
low a social level as the surrounding natural conditions 



MAINTAINING A HIGH STANDARD OF LIFE. 223 

will allow. What is needed is that every one be re- 
quired to do all his part, and that each one should ob- 
tain the whole reward which nature gives for labor and 
abstinence. So long as interest is low, and cheap labor 
is allowed to compete with skilled labor, the benefit of 
low interest does not come to the laborers, nor that 
of cheap labor to the capitalists, but the loss of both 
classes goes to the landlords, who reap all the benefits 
of low interest and cheap labor, no one receiving the 
whole of that reward which nature offers to those who 
save and labor. If intelligent laborers, who would save, 
had only to compete with the ignorant, who would not, 
the former could win in the contest everywhere; it 
is only when the latter are reinforced by low interest 
that they obtain the victory. 

If this be true, then the endeavors of the state and 
the desires of the people to produce a low rate of in- 
terest are not favorable to the growth of capital and 
the prosperity of the country. The policy of the 
state should be rather to check the growth of that 
class of capital which is only loaned on safe invest- 
ments, and encourage those classes of laborers who are 
willing to save if sufficient inducement is offered. 

The state has ample power to do this, and that, too, 
without increasing the province of government by 
modifying the laws relating to property and the en- 
forcement of contracts. All the powers of the govern- 



224 ^^^ PREMISES OF POLITICAL ECONOMY. 

ment are now exerted to the uttermost to make all 
kinds of property safe investment and to enforce all 
kinds of contracts, on the grounds that these laws are 
necessary to encourage the growth of capital and lower 
the rate of interest. Of the kinds of capital which 
these laws encourage, most progressive nations have as 
much already as can find investment, and much more 
of this kind of capital could be had if employment 
for it could be found. For these reasons many of the 
present rigid laws for the enforcement of contracts 
could be modified and yet not reduce the amount of 
capital below what is needed. 

For property there are two kinds of security, the 
one insuring to each producer the fruits of the industry 
obtained by his own exertions, and preventing other 
persons from appropriating these remunerations for 
labor without the owner's approval ; the other security 
insures to the owner the return of property which with 
his consent has passed into the hands of others. These 
two propositions, that property should be protected 
and that contracts should be enforced, rest on very 
different grounds. The state cannot at the same 
time fully protect property and enforce all contracts. 
It is the purpose of most contracts to lower the rate 
of interest by giving the creditor better security, 
and where the rate of interest is low the increase of 
rent takes from every one a large part of that reward 



MAINTAINING A HIGH STANDARD OF LIFE. 225 

to which those who both labor and save have a just 
claim. 

The need of protection of property is evident, and 
of it the government cannot furnish too great an 
amount; but the interests of the public sufiFer when 
the enforcement of contracts is not limited to those 
cases where it is plain the public is benefited. So 
long, for instance, as A tills a field himself the pro- 
duce is his, and the laws should protect him in its pos- 
session. When, however, A yields possession of the 
land to B, on an agreement that B shall give him a 
share of the produce of his labor on the land, there 
are many reasons why the public welfare demands the 
enforcement of the contract. When B agrees to pay A 
a fixed sum for the use of the land, and if the produce 
is not sufficient to pay this rent A may take B's cattle, 
horses, or other capital, the reasons for the enforcement 
of this contract become less evident; but still less evi- 
dent are these reasons when B agrees that A may take 
his future earnings to make up for a deficiency in 
the produce of the land. The enforcement of con- 
tracts has often been carried much further than in 
the above cases : creditors could put the debtors in 
jail, or sell them and their families as slaves, and 
sometimes the Shy lock could demand even his pound 
of flesh. 

Certainly all these means of enforcing contracts are 
P 



226 THE PREMISES OF POLITICAL ECONOMY. 

not now necessary, and an examination of the present 
laws for the protection of contracts will reveal many 
points where a modification would on economic grounds 
be desirable. At present the payment of all debts is 
enforced by law, and no difference is made whether the 
debtor is a laborer, a clerk, a farmer, or a merchant. 
Many classes never ought to be allowed to run into 
debt, and the best way to prevent it is not to allow 
certain debts to be enforced in the courts. It would 
be far better for the laborers to pay cash for what 
they purchase, instead of buying on credit and pay- 
ing greatly increased prices at a later period. When 
tliis practice is once begun, they are in the power of 
the storekeepers if the state allows such contracts to 
be enforced. The garnishment of wages should not 
be allowed, even if the laborers really wished for it, 
and still less grounds are there for its enforcement 
when all the better classes of laborers oppose it. If 
the payment of such debts as are ordinarily secured 
by the garnishment of wages could not be enforced, 
only those laborers who had character and a sense of 
honor could obtain credit, and they would be just the 
ones who would not abuse the privilege. Besides, 
this would encourage the growth of societies among 
the laborers to assist and aid one another, and such 
societies could do more than the law can to aid sick 
and unfortunate workmen, and without the necessary 



MAINTAINING A HIGH STANDARD OF LIFE. 227 

misery which accompanies the enforced payment of 
debts by law. 

The same course of reasoning shows that those who 
are not laborers in the narrow sense, such as clerks, 
salesmen, and professional men, would be better off if 
the right to enforce contracts against their salaries were 
taken away. They have no need of capital, and if 
they have not honor enough to pay their debts will- 
ingly, it is much better that they be deprived of the 
power to obtain the means of living extravagantly. It 
is easy to decide whether a man is engaged in some 
business requiring capital, and only those who need it 
for their business should the state encourage to obtain 
capital by means of a contract which the state agrees to 
enforce, and even in these cases the use of govern- 
mental power to enforce contracts should be confined 
to the narrowest limits. 

It is only when both parties to the contract are en- 
gaged in some commercial enterprise where buying and 
selling form a legitimate part of their business that con- 
tracts should be strictly enforced by law. To such con- 
tracts there can be no objection on the ground that 
they favor cheap labor, and from them there is much 
advantage to be derived. Without a class of dis- 
tributors whose contracts are enforced by law the ad- 
vantages obtained from localizing industries in partic- 
ular places, and the differences of soil and climate, 



228 THE PREMISES OF POLITICAL ECONOMY. 

cannot be utilized. The benefit derived from the en- 
forcement of these contracts, however, does not prove 
that the state should allow its legal machinery to be 
used to oppress the industrial classes, who never ought 
to have had capital loaned them. The exchange of 
commodities between distant places adds largely to the 
efficiency of labor, but to no greater extent than does 
the act of producing before consuming on the part of 
all engaged in any industry. It is not expedient to 
trample down one harvest to reap another when a more 
discriminating method of procedure will enable both 
of them to be secured. 

Whenever the enforcement of contracts enabling 
men to consume before they produce is lessened, the 
rate of interest rises, because more vigilance is required 
of creditors and less security given to them. This 
effect is much more than compensated for by the break- 
ing up of the combination of cheap labor and low in- 
terest, by which the honorable and intelligent are 
driven entirely out of many departments, and much 
reduced in numbers in all others. The higher rate of 
interest induces all the people to save for themselves 
instead of borrowing, and capitalists as a class will 
vanish along with the low class of laborers by which 
they are sustained. A fall of the rate of interest is a 
sign that capital is not fulfilling its proper economic 
function of extending production, and that the nation 



MAINTAINING A HIGH STANDARD OF LIFE. 229 

can get its supply of capital without submitting to as 
hard terms as formerly, and better terms should be pre- 
ferred to a low rate of interest and the disastrous con- 
sequences in which it is sure to involve the whole 
nation. 

In all productive enterprises there is considerable 
risk. Some years the crops are better than others, rail- 
roads and ships do not always have the same amount 
of goods to transport, and the producers of manu- 
factured commodities do not find as ready sales for 
their products at one time as at another. Although 
these risks are very much greater in one occupation 
than in others, yet there is always some risk in every 
productive undertaking, and the question necessarily 
arises. Who shall bear the risk ? According to the 
method of division of profits usually pursued in factories 
and other corporations, a certain rate of interest is given 
for as much capital as can be securely invested, and 
the rest of the capital is held by the stockholders or 
partners, who assume all risks. In this way the losses 
are borne and the extra gains are secured by a very 
few persons, and from such an arrangement there can 
be but one result. The laborers and the mass of the 
capitalists who seek safe investments will have much less 
intelligence, and thus interest and wages will sink to a 
lower point than would be the case were all the inter- 
ested parties compelled to assume their share of the risk. 

20 



230 THE PREMISES OF POLITICAL ECONOMY. 

The division of capital into two classes — safe and 
unsafe investments, or bonds and stocks, as they 
are commonly called — causes the cautious classes of 
capitalists to prefer bonds, while the sanguine and ad- 
venturous persons take the stocks and have the entire 
control of industry. Such men, naturally bold and 
reckless, tend strongly to speculation rather than to 
legitimate enterprise, since greater immediate profit is 
often obtained by the former than by the latter means. 
In any nation where the more daring portion of the 
capitalists are allowed to assume all the risk of every 
enterprise there will be sure to grow up a class loving 
such risks, and the business of the country will be 
turned from the most substantial investments for capi- 
tal to those most hazardous, yet offering a chance for a 
few to make a great gain.. Daring capitalists may 
prefer a small gross profit in a hazardous enterprise, 
most of which will be obtained by the few who are 
successful, to a safe investment offering a much greater 
gross return ; but surely this speculative spirit is not 
what the public welfare demands. Most of the indus- 
tries of a country will always be in dangerous hands 
so long as two-thirds of the capital engaged in them is 
in bonds or notes and the stock is again given as se- 
curity for the greater part of its value. The pros- 
perity of the people demands that all capitalists, and 
even laborers, should bear their share of the risks in- 



MAINTAINING A HIGH STANDARD OF LIFE. 231 

cident to all productive enterprises, and receive a part 
of the extra gains. If all of the capital of any cor- 
poration were in stock, and this stock could not be 
given as security on which to borrow more money, 
much the greater part of speculation would be done 
away with. The more conservative capitalist now 
holding bonds would then have a voice in the manage- 
ment of the affairs of the company, while the more 
daring persons, now inclined to take risks, would be 
limited to their own capital, and thus could speculate 
much less than at present, when by giving their stock 
as security they can often obtain an amount of stock 
five or six times that of their capital. Speculation 
can only be limited by greatly increasing the propor- 
tion of stocks to the safe investments, such as bonds 
and notes, and by limiting the amount for which stock 
or other property can be given as security to a very low 
per cent, of its value. 

The extent of the injury which a strict enforcement 
of contracts brings to a nation is largely determined 
by the stability of the value of commodities. Where 
the fluctuations of values are small and infrequent, 
the injury is much less than when large and frequent 
changes in values cause the return for labor to be so 
uncertain that all industry becomes largely a matter 
of speculation. The more extended use of land having 
great obstructions to its cultivation, production on a 



232 THE PREMISES OF POLITICAL ECONOMY. 

large scale, and the many evils arising from the use of 
cheap labor and low interest, all tend to increase the 
fluctuations of values, and to destroy the stability of 
the value of the precious metals used as money by the 
whole world. From these causes the risks of all pro- 
ductive enterprises have in the past gradually increased, 
and they will soon be so great that a small indebted- 
ness may ruin the most cautious producer if the en- 
forcement of contracts is not limited, and every one 
engaged in production compelled to assume his proper 
share of the risk. 

The reason usually assigned for not limiting the 
power of contracting debts is, that by this means the 
capital of a country gets into the most efficient hands. 
Certainly it is often true that the efficiency of capital 
is thus increased, but surely capital is not best utilized 
when nine-tenths of it is out of the control of those 
by whom it has been saved. 

In former times, when the tendency to save was 
weak and the disinclination to lend capital was strong, 
the enforcement of contracts did add much to the effi- 
ciency of the small amount of capital which the nation 
possessed. At the present time, however, there is no 
lack of capital for those industries where the scale of 
production is large enough to offer security to those 
seeking safe investments. If further progress is made, 
it must be accomplished by favoring those who, saving 



MAINTAINING A HIGH STANDARD OF LIFE. 233 

for themselves, will utilize the many opportunities to 
labor which production on a large scale has not de- 
veloped. The enforcement of contracts adds to the 
efficiency of the surplus capital which cannot be em- 
ployed in the possessor's own business, but it reduces 
the return on the capital which the owner uses him- 
self. Safe investments, therefore, should be encouraged 
when but few are willing to save. The extra security, 
however, should be gradually withdrawn as the rate 
of interest falls, so that a greater number of persons 
will have sufficient inducement to save and become 
skilled. By this method alone can all those opportu- 
nities to labor be utilized which require for their de- 
velopment a skilled workman who saves for himself. 
The state should not prevent all safe investments, but 
it should limit them, so as to cause all necessary risks 
to be borne by as large a part of the producers as 
possible. 

Whenever the government enforces all contracts the 
creditors rely too much on the power of the state, 
and do not use that vigilance that would otherwise be 
necessary. The capitalists becoming less intelligent 
when thus patronized by the state, seek only safe in- 
vestments, such as bonds and mortgages, while the 
same influences lower the moral standard of the debtors, 
since capitalists would as soon lend to dishonorable as 

to honorable men if there is a chance to protect their 

20* 



234 THE PREMISES OF POLITICAL ECONOMY. 

interests by legal means. That society could exist and 
prosper without contracts being enforced by the gov- 
ernment to any extent is well illustrated in the United 
States, where, on account of the expense, delay, and 
uncertainty of justice, many classes of capitalists are 
forced to be careful that none of their money gets into 
dishonest hands and use that vigilance which would be 
necessary if no enforced debts were allowed by law. 

Wherever capitalists must rely more on themselves 
than on the laws, commerce and trade are in a better 
condition and the rate of profit better than in those in- 
dustries where the laws can be fully enforced. Agri- 
culture forms the best example for showing the evil 
results of capitalists relying on the law. The crops of 
the farmer mature only at certain seasons of the year, 
and whatever he has is in plain sight and cannot be 
removed. For these reasons a dishonest man can be 
placed on a farm, and easily watched and prevented 
from escaping without the payment of rent or interest. 
Whenever the honest and intelligent farmer must com- 
pete with the low and ignorant of his class, aided by 
an absentee capitalist, the combination of ignorance and 
capital held together by the force of the law always in 
the end succeeds. Those having a low rate of interest 
and cheap labor can pay a higher price for land than 
the intelligent, upright farmer, who needs high wages 
and interest in order to have sufficient inducement to 



MAINTAINING A HIGH STANDARD OF LIFE. 235 

live and bring up a family who are not a dishonor to 
the nation. If the agricultural classes are ever made 
to prosper, it can only be done by such limitations of 
the power to enforce contracts and the rights of prop- 
erty in land as will make it unprofitable to let any but 
the strictly honest and intelligent occupy farms. Then 
there will be a higher rate of profit and a great increase 
of produce and a general improvement of the agricul- 
tural classes. 

In many States of the Union important steps have 
been taken in the right direction by enacting exemption 
laws and giving homestead rights to the occupant. 
These laws will be of little importance, however, so 
long as the parties interested are allowed to sign away 
their rights, since the very classes which should be 
prevented from obtaining possession of the land are 
always willing to sign away all rights and thus defeat 
the purpose of the act. 

The principle which should be recognized in laws 
protecting the agricultural as well as all other classes 
of producers is, that no one should have a legal right 
to pledge the produce of his own labor before he has 
produced it. The share of annual produce of the coun- 
try due to the laborers should be reserved for them, 
and the law should not take any one's share from his 
possession on account of any contract made before the 
work is performed, nor should the law enforce any lien 



236 ^^^ PREMISES OF POLITICAL ECONOMY. 

on the annual produce of industry that will reduce the 
share that should go to the laborers. The right to 
mortgage or rent land should be so limited that there 
will be enough produce remaining to give those who 
labor on the land their part of the annual produce, 
and no agreement which allows rent or interest to 
absorb the laborer's share should be enforced. Natural 
causes will not allow any class to survive who consume 
before they produce, and all laws which allow this to 
be done are detrimental to public welfare. Instead of 
consuming months before they produce, the laborers 
should produce months before they consume. It is a 
law of nature that labor performed before the com- 
modity is needed will greatly increase the produce, and 
no social regulation should allow those who consume 
before they produce to displace those who conform to 
what nature demands. The laws which aid those who 
consume before they produce are said to aid poor men, 
but if properly examined it will be seen that such laws 
do not aid poor men, they make poor men. The cor- 
rect method of aiding the poor and unfortunate is in 
the formation of societies among the laborers for that 
purpose, and in this way those who deserve aid can 
get it. To allow laws favoring ignorant and improvi- 
dent men to be enforced, causes the displacement of 
both the honest laborer and those poor men who really 
deserve aid, by a lower class of laborers not willing to 



MAINTAINING A HIOR STANDARD OF LIFE. 237 

couform to natural laws. Any one who consumes 
before he produces is a slave of some one else, and no 
free man should be compelled to compete with slave 
labor. The poor and the rich are always found in 
combination, and when no legal obstacles are placed in 
the way of the success of this combination, they will 
force the price of labor so low and that of food so high 
as to drive out the independent and intelligent laborers 
who would furnish their own capital and thus make 
co-operation a success. It is only where tests of intel- 
ligence prevent the employment of cheap labor, and 
where limitations to the enforcement of contracts and 
the right of inheritance prevent the fall of interest, that 
this combination can be displaced by men who conform 
to nature enough to be really free ; and no one is really 
free but he who possesses such qualifications as would 
enable him to survive if he were placed in an isolated 
state where he would be compelled to supply all his 
wants. When this is done poverty and ignorance will 
no longer increase as civilization progresses, and each 
man will obtain all the reward which nature gives in 
return for intelligence, labor, and abstinence. 

For the preservation of a high standard of life more 
than a high rate of interest and wages is necessary. 
Mankind has a tendency to increase, and this increase 
must be provided for by an extension of cultivation. 
Although the tendency to increase is reduced as man 



238 ^-5"^ PREMISES OF POLITICAL ECONOMY. 

conforms more and more to the demands of nature and 
thus acquires increased means of enjoyment, yet the en- 
larged population must be provided for, or society will 
sink to a lower social state, where the higher rate of 
increase will be required to replace the greater losses 
through premature deaths, due to the less favorable 
surroundings. The growth of population compels 
mankind either to progress or retrograde ; there is no 
available middle course; either through an extension 
of the field of employment the wants of all men must 
be provided for, or the evils of an unequal distribution 
of wealth will reduce the efficiency of labor and cause 
man to fall back to a prior social state. An extension 
of production, however, would of itself be desirable 
even if there were no necessity forcing man in this 
direction. The obstacles to cultivation when once sur- 
mounted do not cause additional proportional labor to 
be used in tilling the new land, while the more varied 
consumption and the enlarged capacities of enjoyment, 
which always accompany a greater conformity to nature, 
increase the pleasures of life without adding to its 
burdens. 

The means which thus far have been used to procure 
an extension of the field of employment are costly and 
wasteful in their operation, and by causing an unequal 
distribution of wealth usually prevent the very result 
they are supposed to accomplish. When the state 



MAINTAINING A HIGH STANDARD OF LIFE. 239 

makes no provision for the extension of cultivation, 
it must be brought about by a diminution of the re- 
turn for labor and capital in the field of employment 
already occupied below the immediate return on the 
new land. In this manner labor and capital are in- 
duced to leave their old industries and displace the 
obstacles which prevent the use of new land. Suppose 
that of every twenty acres ten are already in use, the 
price of the produce being fifty cents per bushel, and 
that fifty-five cents a bushel are required to bring the 
eleventh acre into cultivation, sixty cents for the twelfth 
acre, and a like increase of price for the others. With 
free competition the price of produce must rise to fifty- 
five cents a bushel before the eleventh acre will be 
tilled. On ten of the eleven acres now used the cost 
of production has not risen, and the additional five cents 
a bushel on all their produce goes to the owners as rent. 
The people pay eleven times as much for the additional 
produce as they would have paid if they had antici- 
pated the increase in price of produce and prevented it 
by bringing the new land into cultivation at public 
expense. When the twelfth acre is brought into use 
the public pay twelve times what is necessary for this 
purpose, and a proportionally greater amount for the 
other acres. They also pay permanently for what re- 
quires but a temporary outlay, since the extra cost is 
only necessary while the land is being prepared for 



240 3"^^ PREMISES OF POLITICAL ECONOMF. 

tillage, yet under free competition the price must con- 
tinue to rise, so that produce may be obtained from 
other lands having a greater cost of preparation. 

The only economic method for any society to pursue 
is to anticipate the rise of rent and use the public reve- 
nue to overcome the obstacles to the extension of the 
field of employment. Even if taxation reduced the 
earnings of labor, it would be better to have a small 
reduction in this way than the much larger reduction 
of wages which the rise of rent would otherwise occa- 
sion. There is, however, no reason to believe that an 
increase of taxation would be a burden upon the la- 
borers, since it would reduce rent, if there is no land 
at the margin of cultivation. 

The advocates of the nationalization of land, who 
demand that all taxes be placed on rent, base their doc- 
trine on the truth of the Ricardian theory of rent, 
which asserts that there is always some land at the 
margin of cultivation which pays no rent, and will be 
thrown out of cultivation if the price of agricultural 
produce is lowered. When all land pays rent, any per- 
manent tax will reduce rent, since it will change the 
ratio at which food exchanges for other commodities. 
If ten yards of cloth exchange for a bushel of wheat, 
and a tax equal to the value of one yard is laid, either 
on cloth or food, it will be paid from rent so long as 
the exchange of nine yards of cloth for a bushel of 



MAINTAINING A HIGH STANDARD OF LIFE. 241 

wheat does not reduce the quantity of wheat produced. 
Rent should be anticipated and prevented, but not 
confiscated. There never has been guaranteed any 
permanent ratio of exchange between agricultural 
produce and other commodities, and if the people use 
legitimate means to bring about a ratio of exchange more 
favorable to themselves, the landlords have no right to 
complain. The obstacles to the extension of produc- 
tion, whether in men or land, must be removed even if 
at public expense, or the people can enjoy but few 
pleasures, while land and intelligence will be mo- 
nopolies, and absorb the larger share of the produce 
of industry. 

The removal of the obstacles in laud is greatly sur- 
passed in importance by the public utility of a correct 
system of education displacing the obstacles to the in- 
crease of intelligence. Even the obstacles to culti- 
vating land arise mainly from ignorance and prejudice, 
and are removed by the broader view of life which 
education brings to its possessors. It is upon educa- 
tion alone that we can rely for increasing the efficiency 
of labor, and bringing out all the qualities in land and 
man which are necessary to adjust man to the conditions 
of nature, and open up to him all the means of enjoy- 
ment which nature offers to those who conform to all 
her demands. 

In the original man only his passions and appetites 

L (? 21 



242 THE PREMISES OF POLITICAL ECONOMY. 

are active, while all the other sources of pleasure are 
unavailable, since their appreciation depends upon qual- 
ities not as yet called into exercise. Each different 
occupation develops some quality which adds to its 
possessor's sources of pleasure. The nations which 
follow the chase as a means of support derive their 
pleasures from this source ; nomadic tribes delight in 
horsemanship and other similar sports ; warlike nations 
enjoy archery, hunting, and fencing ; the agricultural 
classes have resources of happiness closely connected 
with their surroundings, and the individuals of each 
class in every other occupation take their pleasures 
from sources which their active qualities allow them to 
enjoy. 

The man whose vocation calls into activity but one 
quality has but few sources of pleasure, and in him the 
tendency to overpopulate, to eat, and to drink is so 
strong as to injure himself and society. It is to such 
men, and not to those with fully-developed faculties, 
that Malthus refers to prove the universality of his 
law, and there is a seeming justification for this posi- 
tion when we see how universally the combinations of 
weak men, with but one active quality, displace the 
strong men, who have developed all the qualities given 
them by nature. Wherever an extended division of 
labor is carried through there is a combination of men, 
each having only one quaUty developed, and relying 



MAINTAINING A HIGH STANDARD OF LIFE. 243 

on those having some other active quality to make up 
his deficiencies. They all desire only physical pleas- 
ures, and the field of employment is limited by the 
unequal distribution of wealth which they are sure to 
bring upon themselves. The greater the number of 
qualities Avhich are developed in any man the more 
sources of pleasure will he have, and the greater will 
be the inducement to labor and to control his physical 
pleasures, so that he may have the means of enjoying 
all that his developed faculties allow him to appreciate. 
Man's power to enjoy is commensurate with his 
power to produce, and there are no means of enlarging 
our sources of pleasure but by increasing our industrial 
eflficiency. It is not the man who can do one thing 
well, but he who is efficient in many directions, that 
has the most resources for obtaining happiness. The 
injuries accompanying the division of labor arise from 
each man's devoting himself so exclusively to one occu- 
pation that he loses both the power to make and to 
enjoy what others produce. When each person can 
perform all the acts necessary in an isolated state, it 
increases the efficiency of all if one becomes a tailor, 
the second a spinner, the third a shoemaker, and so on, 
the others taking those vocations in which they are 
most efficient. Each one, however, following his trade 
exclusively, loses his power to make anything else, and 
also his ability to enjoy what he formerly produced, 



244 THE PREMISES OF POLITICAL ECONOMY. 

and thus the whole society sinks to a lower social state, 
where physical pleasures are the sole means of enjoy- 
ment. The increase of drunkenness and other physical 
vices which have accompanied modern progress are the 
result of the extended division of labor, which destroys 
the ability both to produce and to enjoy most of those 
things that are sources of pleasure to man in an isolated 
state. We can obtain the advantage derived from the 
division of labor without losing the ability to enjoy all 
kinds of produce only by so educating all the faculties 
of man that he will have that independence and all 
those sources of pleasure which isolated men enjoy. 
Moreover, those qualities which increase the sources of 
pleasure are the very ones by which the field of em- 
ployment is enlarged and the tendency to overpopulate 
is reduced, and only when education has developed all 
the qualities in every man can we expect this tendency 
to become so harmless that all men can enjoy the pleas- 
ures of an isolated state along with the efficiency of 
modern civilization. 



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